Lease Car Rental & Sold after lease expiry

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Lease Car Rental & Sold after lease expiry

Hi-I took Ford Car under lease rental Option @10900/-PM. I have paid 3 year lease (means total amount of Rs.3.92 Lacs) and this option eligible for tax benefit. After 3 years, the company offered me a price of Rs.4.05 Lac and I opted for that. They also deducted Rs.50K as Perks.Tax and the car was owned by me. I later sold the car for Rs.5.40 Lacs. So please advise me how much Tax is payable/refundable to me in this

Profile photo of Kolluru Murthy Asked By: Kolluru 2 replies 0 helpful answers Last Updated: 4 months, 1 week ago
  • Profile photo of Kolluru MurthyKolluru
    Participant

    Hi-I took Ford Car under lease rental Option @10900/-PM. I have paid 3 year lease (means total amount of Rs.3.92 Lacs) and this option eligible for tax benefit. After 3 years, the company offered me a price of Rs.4.05 Lac and I opted for that. They also deducted Rs.50K as Perks.Tax and the car was owned by me. I later sold the car for Rs.5.40 Lacs. So please advise me how much Tax is payable/refundable to me in this

  • Profile photo of Chetan ChandakChetan Chandak
    Moderator

    When company sold you the car the difference between the written down value of the the car in the company’s books and the price recovered from you is taxable as perquisite. So company was right in deducting the applicable tax on the perquisite value.

    Once the car is transferred to you it is considered as personal effect unless you further use it for your business purpose which does not seems to be true in your case. So any profit on sell of the car by you will not attract capital gain tax as it is a personal effect.

  • Profile photo of Kolluru MurthyKolluru
    Participant

    Thanks for the reply, one clarity needed here. The company has valued the vehicle at Rs.5.78 Lacs and since they offered me at Rs.4.05 Lacs, they have taxed 30% on differential amount, which is right thing to do. But my question is that since I have sold it for Rs.5.40 (which is the Market Value & not Rs.5.78 taken by compnay), am I not eleigible for the refund of tax on the differential amount of Rs.30K(5.78-5.40), which would save me an amount of Rs.10K. Kindly correct if I am wrong here, thanks in advance

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