car scheme faq

8/12/2019 Car Scheme FAQ

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FAQS : Car Scheme

HR -

Rewards Solutions


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FAQs

What do you mean by Company Car Scheme?

In order to enable employees to conveniently travel and to discharge duties

efficiently, the company would facilitate the employees to purchase a car. The

scheme that governs this is referred to as the Company Car Scheme

What are the eligibi lity condit ions for availing the company car scheme?

The eligibility is defined per the bands which the employees fall into and are as below :

Max Eligibi lity (Ex Showroom Price)-

Commercial Organization ( new grades)

Commercial Organization( Old Grades)


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FAQs

Conzerv Organization

GSC, LKI, IPO & GTCI

IT BU


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FAQs

How are the payments under the company car scheme scheduled?

The schedule is indicated below:

Commercial Organization (New Grades) - Payment Schedule

Commercial Organization( Old Grades) Payment Schedule


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FAQs

GTCI, IPO, GSC, LK Organization Payment Schedule

Conzerv Organization Payment Schedule

IT BU


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FAQs

What is the benefit of availing company car scheme over car loan taken

outside by me?

With the company car scheme, the rate of interest charged is significantly lesser

than the car loans provided in the market. Also the EMIs in case

of Company Car

Scheme are recovered through compensation, thereby providing tax

benefit on

EMI amount

Can a second hand car be chosen under the company car scheme?

The vehicle needs to be a new car. Old/second hand cars are not admissibleunder this policy


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FAQs

If I opt for the car scheme, how is it adjusted in the compensation?

The EMIs as per the value of the car taken would be deducted from the Flexi Benefit Plan

on a monthly basis

What happens if I end up choosing a car of higher value than my eligibili ty?

In case employee chooses Car of higher value than his eligibility, the excess payout as

calculated by the Company will be recovered along with the initial down payment


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FAQsWhat is the process through which I can opt for the company car scheme?


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FAQs

How many cars can I take under the company car scheme?

Only one car can be availed by the employee at a time and the scheme can be rejoined

only after 4 years, post completion of the scheme already enrolled under

Who should I approach for my queries related to car scheme?

Please contact your HR Business partner for any queries on the scheme

What are the formalities/documentation required to be furnished to buy back the car

at the end of the period?The employee has to send the completed Car Scheme Application Form to payroll along

with the following documents:

1.

Proforma Invoice

2.

PAN of dealer

3.

Address of dealer with contact details

4.

Contact Person

5.

Vendor Registration Form

6.

Cheque of initial payment


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FAQs

Is the company car option available over and above my package?

No, the company car is available as part of the compensation structure and on opting for the

same, the resultant EMIs are reduced from the Flexi Benefit Plan component

I already have a personal vehicle in my name. can I sti ll become a part of this

scheme?

Yes, in case you decide to buy a second car you can buy through the company car scheme.

However, your own vehicle can not become part of the Company owned Car Scheme

When is this scheme effective from?

This scheme is effective only 1st

October 2010


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FAQsIs there any perquisi te tax attached to the car scheme?Yes there is perquisite tax attached to the car scheme.

In 1st year of Car purchase, Perk value per month will be for 600 or 900 basis the engine capacity of

the car -

below or above 1600cc respectively

2nd yr onwards perk value will be 1800 or 2400 per month basis the engine capacity of the car -

below or above 1600cc respectively

What happens in case I get transferred from one place to another?The guidelines referred to as part of the Transfer and Relocation policy would apply in case of a

transfer

Can I buy a car higher than my eligibi lity limit by paying more?Yes you can, by paying the difference of the amount along with the initial down payment required

along with prorated differential for all other charges on the Car (like Road Tax, Registration,

Insurance, etc.). For ex

if your eligibility is Rs 7 lakhs, and you wish to purchase a car of value 8

lakhs, then along with the down payment, you would have to pay:

Differential of Rs 1 lakh

Prorated all other charges for extra 1 lakh

Do I get taxed on my EMIs?As per current Tax rules, the EMIs that are removed from Flexi Benefit Plan are tax friendly.

However, the same is subject to changes in Tax laws that may take place from time to time

In case of damage not covered under the insurance, who wil l bear the cost ?The employee would have to bear this cost


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FAQs

In case an employee exits the Company before the completion of 4 years, the employee

or his legal heir will have to buy back the car at the cost established by the company on

account of foreclosing at WDV (written down value). In addition,

the Company will recover

prorated insurance, road tax and registration amount. VAT applicable to the sale will need

to be paid by the employee

In case I resign during the period of my Car Scheme tenure, what wi ll be the treatment?

How is the amount of repayment calculated in the event of a foreclosure?

The calculation is indicated in the following example below:

Date of Joining the scheme = 1st July 2010 ; Date of Exit = 30th

June 2013

Cost of Car = 560,000

Depreciation @25% for the term of Car = 560000*25%+560000*25%+ 560000*25%=420000

Remaining Amount = 140000

Recovery towards Insurance (if say Insurance of Rs.7000 already paid by the Company for theyear) = 7000

Recovery towards Road Tax & Registration (say initial payment made by the Company = 50,000)prorated for the balance period = 12,500

Total Recovery to transfer Car to the employee = 140000+7000+12500 = 159,500

VAT @12.5% = 19938

Total Recovery = 179438

Refund: 10% upfront payment made by the employee (to be refunded

for balance period of 1 year)

= 14000

Total amount to be recovered from employee = 179438 14000 = 165438


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What is the treatment i f I get transferred abroad?In case an employee gets an International assignment, the employee may:

Continue the scheme by making payment in lieu of EMI by cheque on quarterly

basis

Exit from the scheme under foreclosure clause and buy back the car.

What is the process and taxation, if any when I buy back the car?

At the end of maturity of Scheme Period of 4 years or earlier and after receipt of

payment of residual value from the employee (as applicable), Payroll to issue a car

transfer letter, addressed to RTO Office of the concerned location and Form 29

(Form of transfer of ownership of motor vehicle) and Form 30 (Application for

Intimation & Transfer of ownership of motor vehicle).

The perquisite value and applicable VAT shall be computed based upon the

applicable tax rules at the time of foreclosure/ transfer. The Income Tax Actprovides that transfer of any motor car directly or indirectly to an employee at a

consideration which is less than the written down value ofthe motor car is to be

regarded as a benefit or amenity provided to the employee and the differential value

will be taxed under the head Salary

as Perquisite in that relevant year. The

written down value for this purpose has to be determined by depreciating the car atthe applicable rate as per income tax act

FAQs


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Please contact your HRBP for any further queries

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