What Is Company Car Lease Policy in India

With a business rental vehicle, you get a variety of tax benefits for your business. You can deduct mileage using either the IRS`s standard fare or the actual cost of miles traveled, according to the IRS. The amount of your deduction is equal to the percentage of total usage that the company`s rental vehicle uses for the business. Car business rental deductions apply to car rental payments, car maintenance and repair, and auto insurance premiums covered by your business. In some cases, you may not be able to deduct the insurance because it is already taken into account in some elections, e.B. standard kilometers. In the event that the employee leaves the company, either after maintaining the entire rental period or before, the employer will not release the employee or the final regulations until the employee brings the release of the leasing company (since the company has provided the guarantee). Even in the event of termination, it will either demand the remaining amount from the employee, or continue the leasing service or ask for another guarantee from the bank/leasing company. To illustrate an example, let`s say your salary is Rs. 10,00,000.

Of this amount, Rs 2,000,000 is the amount of your car rental, and another Rs 1,50,000 will be provided for car maintenance, insurance, fuel and driver compensation. This means that Rs. 3,50,000 will be deducted from your taxable income, and you are required to pay only Rs. 6,50,000 in taxes. As part of a car rental, you enjoy all the benefits of what a car owner has, but for a limited period of time. Here, the leasing company will provide you with a car while it is still full ownership of it, but you will have to pay predetermined monthly rents for the cost of using the car plus various expenses. These rents or payments include the cost of insurance, maintenance, applicable taxes and other recurring costs. While some leasing companies require you to purchase auto insurance, others will include the cost in the rent.

At the end of the selected rental period, you must return the car to the company. If you wish to take possession of the car, you will have to pay an amount specified by the leasing company. Whether it`s the “company car” your employees drive or a full fleet of vehicles your company needs for your business, renting your vehicles can be a viable option. A company rental vehicle is a car that your company essentially rents for a certain number of years and returns after a certain amount of time. You`ll be bound by the terms of the lease during this interval, but what you get is a relatively new car – plus a few extra perks. Companies that own their cars have to pay the bill for all repairs to their vehicles, but those that lease their vehicles find that maintenance and repairs for them are already covered by the lease, according to CarLease. However, insurance rates for a rented car are usually much higher because you have the car during its most valuable years. You won`t get the lower prices associated with owning a car over time, as it becomes cheaper to insure it.

In addition, if your rented company car is damaged or stolen, you will be refunded the market value of the car, not the remaining rental payments for the vehicle. The SalaryPlan portal is packed with powerful features that ensure your employees make an informed decision and have a seamless rental experience. With credit and rental calculators, guided tours, instant quotes, real-time automatic delivery status, and online support, renting a car has never been easier! “Leasing works cheaper because you also get tax benefits. In addition to paying off loan EMIs, you also have to pay regularly for maintenance, insurance, and what isn`t when you buy a car. The biggest difference is the upfront payment, which can be avoided when you rent,” said Piyush Khatri, founder of Sahastha Financial Consultants. SalaryPlan is a unique car rental solution that offers a tax-efficient, flexible and convenient car purchase method for employees. It also makes managing auto policy for employers hassle-free. As india`s leading car rental portal, SalaryPlan is a one-stop shop where your employees can compare cars, choose insurance and order their cars online. With a dedicated account manager for you and a friendly customer support team for your employees, SalaryPlan takes care of everything! Leasing allows you to drive a car without buying it or paying a huge sum. When you rent a car, you only have to pay regular monthly payments as long as you keep the car. These rates include vehicle cost, insurance, maintenance, applicable taxes and other recurring costs. As a rule, there is no deposit.

There are two types of leasing models: leasing and operating leasing. Business leasing typically follows the operational leasing model, which requires you to return the car to the lessor or purchase it at the market value in effect at the end of the lease term. The leasing model transfers ownership of the car to your name at the end of the term. “Few people choose to buy the car at the end of the term because people prefer to opt for a new model or upgrade unless there is an emotional attachment to it,” said Sunil Gupta, managing director and chief executive officer of Avis India, a car rental company. What attracts most employees to leasing is the fact that it offers a tax benefit of up to 30%, as you can claim the entire rent as an expense. The leasing concept is here to stay – the growing number of startups that help you rent almost anything under the sun is a testament to this – and it`s quickly catching up, even when it comes to vehicles. It started with corporate leasing, initially for executives of multinationals, which was practiced by luxury car manufacturers. But it has slowly become the norm in India and the concept is now moving into retail, with companies like Mahindra and Mahindra praising some of their models directly to customers. The most common question is, what is the best option between owning your own car or a car under the employer`s car rental policy? Some people today don`t have the time and patience to check the regular maintenance of their vehicles, insurance renewals, and other responsibilities related to car ownership, and renting makes sense for those buyers.

But if you`re looking for ownership, long-term value, and the freedom to modify and keep the car the way you want, buying the car is your best option. If you are someone who likes to change cars often, then leasing is for you. But remember, you need to return the car at the end of the term. So, if you are sure that you want to keep it, you can inquire with the owner and buy it at the prevailing market price. For now, however, you may have limited options as retail rentals in India are still in their infancy. Buy a car or rent it only when you see a need, but not just because you can afford to buy it, or when the car rental policy is available from the employer. This is the first thing you need to decide before looking for the best options between the two 🙂 No maintenance issues Maintenance of rented vehicles is made easier for employees, as car leasing companies make sure that they take care of this aspect themselves. This allows employees to opt for maintenance services and keep their vehicles up to date at all times without having to put up with the effort for actual implementation. In addition, when it comes to vehicle maintenance, there are specific allowances that can help you reduce your tax burden. “In cases where a company car is given to the employee as part of their CTC, not only pre-tax rent, but other expenses related to maintenance, driver costs and fuel allowances can also be part of the pre-tax component,” says Venkatesh K., head of sales at ALD Automotive.

According to Gupta, the car rental market in India is currently worth 1,500 crore and will grow at a CAGR of 15-20% over the next decade. “About 40 percent of our business comes from car rental,” Gupta said. “The biggest advantage of renting is that you can drive the car in its most difficult years,” Varun Krishna, a certified financial planner, told International Money Matters. And that`s what captured the imagination, because people today like to change frequently. Leasing works well for companies that don`t plan on keeping their vehicles for a long time. You usually only have a business rental vehicle for two or three years, as opposed to a vehicle from your business that your business can keep indefinitely and dispose of at will. During this relatively short rental period, you will make lower car payments than when you bought the company car, although at some point payments for the latter are stopped, while you will still have to make payments if you continue to rent. Access to better models at the end of the lease, the employee has the opportunity to switch to a new car. This means that business car rental employees have access to new vehicle models with advanced safety features and high-end technology without paying the actual price of the new models. .