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Old 26th November 2009, 10:37   #76
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Originally Posted by aghosht View Post
Does anyone know of organisations operating out of Mumbai that offer lease plans to individuals self employed professionals such as doctors, lawyers etc.? Lease Plan (Car Leasing : LeasePlan India) seem to be offering the product to corporates only.
Do get in touch with them. Their sales rep (both Leaseplan & Orix) have offered plans to some self-employed dudes in my circle.
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Old 26th November 2009, 11:11   #77
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Originally Posted by SkyWalker View Post
I guess you mean Apr 2010.
The new tax structure / law will come into effect only in April 2011. Subject to the approval in Indian Parliament.

Quote:
Originally Posted by chncar View Post
Whatever tax benefits you will lose in the case of the 'benefit's being abolished will easily be recovered by the lower standardized tax rate, for example just 10% for 1.5 lakh to 10 lakh slab.
Yes, did some more reading & calculations, agree with you. In my case i find that there is no change in tax. (current vs the 2011) the advantage off course is reduced paper work, we don't have to submit the vouchers etc.

This may however impact those who claim most of the benefits and without actually using the same, like petrol etc. I am saying this based on my salary calculations. Since I claim only to the extent of actuals & most part of the benefit remains unutilized. If I were to have utilized all the benefits my tax liability would have gone up post the 2011 changes.

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Originally Posted by kiku007 View Post
Correct me if I'm wrong. I recollect being told that this was retrospect from April 2009 i.e. tax benefits for the current financial year cannot be claimed as well.

I was told that the benefits of the to be scrapped scheme were that the following were part of non taxable income,
* Lease paid on car
* Sriver salary
* Fuel
kiku007, the changes that I was referring is expected to come to force from April 2011. The changes you are referring seems something else.
I am no expert in this area, do check the link which has the details.

Download Direct Tax Code 2009 ? Tax India
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Old 30th November 2009, 13:40   #78
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Originally Posted by GTO View Post
Do get in touch with them. Their sales rep (both Leaseplan & Orix) have offered plans to some self-employed dudes in my circle.
Thanks GTO. Any chance of getting some contact details of the sales rep (or your friends). Reason being Leaseplan person drew a blank when I spoke to them! Maybe speaking to the same sales rep will help (or off course speaking to your friends)
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Old 20th February 2010, 14:14   #79
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Greetings,

I'm told from our admin department that if the car is upto 1500cc, an amount of INR 1500/- would be added to your salary while if the car is above 2400cc, the amount added would be INR 2400 and then the standard tax calculated.
If you're having a driver, an additional INR 900/- would be added.

Thanks,

Nitin.
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Old 21st February 2010, 04:14   #80
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My lease is with Orix (through my company, ofcourse), and I have not been given any headsup on early closure of the lease. The lease's tenure is until May 2012 :(
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Old 21st February 2010, 08:33   #81
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Originally Posted by ph03n!x View Post
My lease is with Orix (through my company, ofcourse), and I have not been given any headsup on early closure of the lease. The lease's tenure is until May 2012 :(

Hi,

To the best of my knowledge, Orix only levies a foreclosure charges if you foreclose within the first year.

A foreclosure charge is levied by Leaseplan, if you foreclose within the first 18 months. I had my previous car on leaseplan, used it for three years and then sold the car by foreclosing the lease. No foreclosure charge was levied on me. I did face a bad experience from leaseplan, where they told me to pay some previous insurance, which was actually renewed by myself and NOT leaseplan. After a lot of arguments, leaseplan decided to share 50% of the cost!

Nitin.
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Old 26th February 2010, 18:49   #82
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Originally Posted by tsk1979 View Post
Hi,
I have been through this situation. I changed jobs in between the lease.
Frankly speaking you stand to lose in this equation if you change jobs in beginning. Since I did this when only one year was remaining, I did not lose much. Morover the fuel and insurance was being paid by company, so in effect I did not lose anything.

At the end of the lease period it depends on company to company. For most companies its simple.
At the end of the lease you pay 10% of the cost of the car and the car is in your name,
Now lets say your car was for 5Lac. At the end of 4 years you would pay 50,000 and the car will be in your name. But lets say the depreciated value of car was 2L, so 1,5L is your benefit and you have to pay tax on that, so another 50,000 gone. So at the end of lease period 1L will go out of your pocket.
Tanveer, I am in a similar situation, with 6 months remaining before the lease expires. I need to foreclose now, as I am leaving my current company.

My question to you and other users is regarding the tax implication on foreclosure that you have outlined above. If the benefit (depreciated value less foreclosure value) is not provided to me by my employer but due to the lease contract between Orix and my employer, how is it a perquisite that my employer is giving me? And if it is not a perquisite, there should be no tax implication. How do you see this? Also, Would be highly obliged if we have any chartered accountants in our tbhp community who may add some colour to this.

Additional context: my lease with Orix is structured such that the asset is always on the books of Orix, the lessor. The company is simply the lessee, and provides me the car. I bear service and fuel costs. I pay EMIs from my salary.

Thanks,
Shiraz.
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Old 26th February 2010, 22:39   #83
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Hi Shiraz,

The residual value of the vehicle should have been mentioned to you at the commencement of your lease. This is either 1% or 10% of the value.

As for you, you may simply foreclose the lease by paying the reminder of the principal amount, road-tax amount and the insurance amount - assuming the on-road value was funded by the leasing company.

There are no other tax implications to this and from the following month, your entire salary would be taxed normally.

Thanks,

Nitin.
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Old 7th March 2010, 21:06   #84
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my employer removes the lease EMI and the fuel allowance from the compensation, the hence one stands to benefit from the lower income resulting in lower tax deduction per month. As of now, that's the only benefit we get in the company car lease plan compared to a normal loan.

But I am not sure what would happen from April 2011 when Direct Tax Code comes into play. Would this kind tax benefit no longer be usable? Would we need to pay tax (hence losing the only benefit in company car lease plan) on your lease EMI and fuel allowance also?

I am planning to buy a car this month, and need to decide between loan/lease. SO any kind of info/help/guidance would surely be very helpful.
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Old 29th March 2010, 00:16   #85
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As of last month, my employer has stopped signing up new lease plans. Any idea on what will happen after April 2011? The car is still in the company's name, and hence a liability for the company - I wonder how can we be taxed for the company's liability!

Even if I am affected, I will sail through, as the remaining tenure of my lease (after April 2011) will be 11 months.
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Old 29th March 2010, 09:20   #86
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a friend of mine was sharing with me about his company's arrangement with lease plan - the car is given to him for his personal use and the company pays the lease cost, month on month. This car is specially bought brand new and given to him for his use. No one else has driven it before.
This lease cost per month is deducted from his cost to company and he is liable for the fringe benefit tax part. He is liable also to pay for the petrol/fuel, which in turn is reimbursed to him from the company and he pays fringe benefit tax on the same.
Since he is on lease plan, this perk receives a tax benefit from the income tax point of view.
the best part is, that he simply has to maintain a log book of movements and does not need to even bother about servicing, maintenance, accident damage or anything at all.
When the car is due for a service or routine maintenance, all he has to do is to call a number and inform them. A driver turns up the next day with a courtesy car, leaves that behind and takes the main vehicle away for the maintenance.
In case he has some bump on the road again all he needs to do is call the same number and all liabilities are handled by the leasing company - all he needs to do is to give a copy of his driving license and move on, in a courtesy car provided to him.

Every four years, the car is automatically retired and a new one provided as per the grade of eligibility. The leasing company and his employer also provide him with a certain flex - if he wants a higher grade of car than his entitlement, he can get it, provided he is willing to put the difference payment towards the leasing cost, from his own pocket. (This doesnt make sense from the financial/ savings/ tax angle so it is better to stick with the exact entitlement as per the company rule.)

The whole system seems completely hassle free and peaceful from a "user friendliness" point of view.

The flip side is that if he leaves the company, he is without personal transport till he buys his own car.

From a large Corporate point of view, leasing appears to make far better sense than buying outright which is why as I understand it, a number of large multi nationals are going in for leasing in a big way.

there appear to be lots of advantages in this if one views a car primarily as an utility item/ like a "commuting aid' to transport one from Point A to Point B.

If however, one has a high level of involvement and interest and emotional attachment to one's car as a highly personalized form of transportation, then I guess one always has a choice to buy and own one's own vehicle.

Last edited by shankar.balan : 29th March 2010 at 09:23.
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Old 29th March 2010, 10:18   #87
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Currently I have seen the following trend:

Petrol bills are tackled by companies providing petro-cards, which get loaded with a fixed sum every month. That is the limit which the company provides based on the grade of the employee.

Apart from that, on the lease part; company also pays the insurance on the vehicle. The EMI has to be paid by the employee. He is liable for tax benefit on the lease amount.

The employee also gets tax benefit on the amount paid for the fuel.
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Old 22nd April 2010, 18:50   #88
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I went through this thread, however still confused about the tax treatment change in 2011.

Let me try putting my case across as simply as possible. I plan to buy a car in the Rs 5 lacs range.
I can pay full cheque by diluting some of my stock investments.
I can apply for a loan, however keeping this as a last option since interest rates are on the higher side. If I do, I might take a 1 year EMI term.
I realize that my current company has a tie-up with Lease Plan. I am not sure if I should go with them, since the only reason for leasing in my case would be tax benefits. Don't think I stand to gain much, since the fringe benefit rules have changed.

Can one of you comment if otherwise?
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Old 24th May 2010, 19:39   #89
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I have booked my car with Leaseplan after calculating the amount i needed to pay when compared to taking a loan. The main reason i opted for a lease is that i don't need to make any down payment. Opting for a lease allowed me to get a car that i wouldn't have been able to afford normally. My montly EMI comes to around 17.6K out of which around 3200 ( the Road Tax, Insurance and the Fleet management charges ) would be paid by the company. At the end of the 36 month lease, i would have to pay 26% of the ex show room price which would come to around 130K. If i had opted for a loan, in addition to the downpayment, i would have to pay the insurance by myself for the 3 years. so even without counting the tax benefits, i would still be paying more with a loan.
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Old 1st June 2010, 17:52   #90
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The company I'm with has a lease tie-up with Sundaram only. The current schemes are -

3-year with rental of 2790 INR/lac and 30% RV, and
4-year with rental of 2310 INR/lac and 25% RV

There are no foreclosure charges. Some VAT will be charged after the first 30-odd months (the exact structure and VAT are different for the two plans) over and above the rental.

Lease rental is 100% tax-deductible, and there's a very weird clause around the tax-deductibility of the VAT which I didn't quite understand.

Car maintenance expenses (fuel, insurance, servicing) up to 1 lac INR per annum are tax-deductible. This option is available *only* if an employee opts for a lease with Sundaram, and not on self-owned/loan-financed cars.

Of course, the PV of 1600/2400 INR/month (depending on engine capacity) applies.

Given these conditions, I think a lease makes little sense unless one is looking at a very small percentage of down-payment for the usual bank loan. This is especially true given the current rates on new car loans (9.5%-11% depending on the bank and one's relationship with the bank).

Regards,
spadix
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