How are company-provided vehicles taxed as perquisites?

When an employer provides a vehicle (or other conveyance) for personal or private use of an employee, it is considered a taxable perquisite under Section 17(2) of the Income Tax Act, 1961. The taxable value is determined based on specific rules outlined in Rule 3(2) of the Income Tax Rules, 1962. The taxable amount depends on factors such as the engine capacity of the vehicle, whether the vehicle is owned or hired by the employer, and whether the expenses (running and maintenance) are met by the employer or employee.

Legal Provision: Section 17(2) read with Rule 3(2) of the Income Tax Rules, 1962

Supporting Case Law:
– Commissioner of Income Tax v. Roshan Lal Sawhney (2011) – Delhi High Court – ITA No. 593 of 2011
– Link: https://indiankanoon.org/doc/150873395/
– Ratio: The High Court upheld the taxability of company-provided vehicles as perquisites under Section 17(2) and the valuation rules prescribed in Rule 3(2) of the Income Tax Rules, 1962.