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Old 25th July 2016, 10:56   #106
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Default Re: Car Lease Options from your Employer

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Originally Posted by ajayclicks View Post
I was under the impression that it was an RTO thingie. Vehicles are registered in the name of a commercial organization, and hence it is at a higher rate, as compared to registration in an individual's name.

Where I am coming from is this:
Me: "Hey, you purchased a car from the car lease program. Are you benefiting?"
Colleague: "Yes! My monthly emi is 15,000 and I am saving Rs. 4,500 (30%) as tax alone"

Wrong, you are not saving Rs. 4,500 as tax. It is much lower. When I ask them to look into their salary slips and tell me the actual difference in tax saved, they never get back.

I have nothing against car lease programs per se. Just that my company's car lease program is a quite opaque, and I have seen many colleagues rushing in, salivating at the thought of saving 30% tax. And they never factor in costs like higher rate of registration, insurance, cost of transferring car in their name (after the three year lease is over).
The Road Tax is the same for individual or corporate @ 20% if ex-showroom exceeds Rs. 9.99L
The 15K in your example is reduced from your overall pay - so you avoid (not save) tax at 33% assuming you are in the highest slab. Note, this doesn't show up in the salary slip but in your Form 16 B which shows car lease - yes, you do get taxed for fringe benefit of 1600 (for <1.6L engines) or 2400 (for >1.6L engines) and a further 800 if you employ a driver - all monthly.

But here is the icing on the cake - Fuel, Insurance, Driver salary, Maintenance, Polishing, Interior cleaning all get tax free (or avoidance) for up to Rs. 2~3L/annum. In addition, my previous employer paid for Road Tax, Insurance, etc., for a company leased car.

So (re)think about it, you may change your mind...
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Old 25th July 2016, 11:19   #107
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Default Re: Car Lease Options from your Employer

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So (re)think about it, you may change your mind...
The benefits of drivers salary are not applicable to me, unless I get hold of a DL and submit fake receipts.

I spoke to quite a few people who had opted for the car lease program in their firms (besides my colleagues), who said that, in the end, the benefit was negligible.

I did not opt for it because of the lack of clarity on many issues- like the amount to be paid as insurance, the 0.33 multiplier to be paid per month, in addition to paying 25% of my purchase price (in year 3) etc. Also, I was buying a seven seater SUV, and my company's FAQ mentioned that 7 seaters are not allowed! Since I was losing interest in this scheme, I did not ask for clarifications.

Again, there is no reason why such a scheme cannot work favorable for an individual. Just do your due diligence.
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Old 25th July 2016, 11:55   #108
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Default Re: Car Lease Options from your Employer

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Originally Posted by AirWind View Post
The Road Tax is the same for individual or corporate @ 20% if ex-showroom exceeds Rs. 9.99L
The 15K in your example is reduced from your overall pay - so you avoid (not save) tax at 33% assuming you are in the highest slab. Note, this doesn't show up in the salary slip but in your Form 16 B which shows car lease - yes, you do get taxed for fringe benefit of 1600 (for <1.6L engines) or 2400 (for >1.6L engines) and a further 800 if you employ a driver - all monthly.

But here is the icing on the cake - Fuel, Insurance, Driver salary, Maintenance, Polishing, Interior cleaning all get tax free (or avoidance) for up to Rs. 2~3L/annum. In addition, my previous employer paid for Road Tax, Insurance, etc., for a company leased car.

So (re)think about it, you may change your mind...
I am still a bit confused, whether I will have more cash in hand or less post car lease, considering I am in 30percent tax slab. Planning to go for Ciaz
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Old 26th July 2016, 07:38   #109
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Default Re: Car Lease Options from your Employer

Not sure about the higher registration cost. Sorry. There is a stamp duty involved which is for signing the lease.
There is one good thing with Sundaram Finance, if you leave the organization you can convert the company lease to a personal car loan and continue to have the car and continue to pay the same EMI for the remaining period before closing it.
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Old 3rd August 2016, 15:00   #110
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Default Re: Car Lease Options from your Employer

OK, let me help clarify few things:
Car Plan is mostly beneficial if:
1. You plan to stick with company for some time.
2. You are going to buy car anyways
3. You are in 30% bracket even after reducing car emi/fuel/maint.
4. There is high spend on fuel/driver anyways.

What few people have been trying to highlight against company car lease is:
1. you pay perquisite tax at time of lease closure. (IT allows to reduce cost of car by 20% every year by WDM meaning by 100000/- car value as per IT is 51200/- after 3 years. If the car comes to us at 25000/- or 20000/- Residual value, 26200/- or 31200/- is our taxable income. This kills major tax saving earned in previous years. (This can be saved, if company allows, to transfer car in relative/friend name or selling in market on lease closure)
2. You pay PTPM at 12% to 15% plus residual VAT (even if VAT set off is allowed) making it atleast 2% higher than interest rate mentioned.
3. Any insurance or road tax will attract PTPM and VAT both making it close to 30% thus negating all tax saving upfront.
4. You loose 1600/- transport allowance (per month) and add 1800/- or 2400/- per month (based on cc of car) in your taxable salary. (Another 900/- p.m. for driver perquisite)
5. High penalty if terminated in between (2% to 12% interest charged on outstanding principal).
6. If insurance is mandatory, you loose the flexibility of choosing the provider, NCB etc. Same is also subjected to interest and VAT. Also it may get added from day one emi.
7. If car is purchased from Gujarat, Kerala or UP, there is no VAT credit possible. So you pay another 5-20% on rentals (as per state). (If this and point 1 above is applicable, car lease may yield negative returns)
8. Differential rate of registration in states like Telangana.
9. You are second owner of car on papers, if you decide to get it in your name on lease completion.

So the real saving comes from fuel/maintenance/driver bills in most cases. So on your actual spends on these in conjunction with limits set by company, the real maths comes.

Decide you way!

Last edited by anubhav22 : 3rd August 2016 at 15:18.
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Old 29th August 2016, 16:37   #111
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Default Re: Car Lease Options from your Employer

Not a query per se, but sharing my experience.

I have a Tata Nano 2012 Lx model, and wanted to opt for a car lease option to exchange it. Looking at tge pros and cons of the lease, I decided to keep the costs low and get some benefits through the fuel allowance that can only be availed if I have a leased car.

I shortlisted the Nano GenX/CNG as the possible candidates after getting my existing car evaluated. Received a quotation from Concorde Motors and forwarded to the leasing company for further processing.

The person in charge of our company's proposals was on leavefor the whole week of 15th August and so one week was lost sitting idle.

In the second week, which was last Monday, I was able to talk to this person, re-sent the quotation and was promised their revert by Tuesday.

That was last week. I called up again, dropped a stinker email and then called up again, to hear that they had already sent the proposal. After I told we hadn't received it, the person on the other end promised to resend it immediately.

After 3 hours and three texts, the proposal has yet to arrive. Just leaves a bad taste in the mouth when faced with such unprofessional attitude.

Orix, goodbye!
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Old 30th August 2016, 22:48   #112
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Default Re: Car Lease Options from your Employer

I have a query on the company leased vehicle.

I took a car on this policy and the loan tenure is completed.
Vehicle got transferred to my name.
While transferring the insurance to my name, insurer said they will not give me NCB. I got a letter from my employer that they have no objections to transferring the NCB to me and I got my policy re-issued in my name, without paying back the NCB
This year, when I tried to renew, the same discussion came up once again and I had shown the same letter and they issue policy with NCB. Today, I get a letter from the insurer [HDFC ERGO] that the previous insurer did not transfer the NCB and hence I need to pay it back OR they will reduce my insurance tenure.

What should I do now?
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Old 30th August 2016, 23:05   #113
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Default Re: Car Lease Options from your Employer

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This year, when I tried to renew, the same discussion came up once again and I had shown the same letter and they issue policy with NCB. Today, I get a letter from the insurer [HDFC ERGO] that the previous insurer did not transfer the NCB and hence I need to pay it back OR they will reduce my insurance tenure.

What should I do now?
The previous insurer should have transferred it but it is too late now I think

https://www.team-bhp.com/advice/no-c...nce-premiums-0

Read a few paragraphs down that article.
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Old 31st August 2016, 00:27   #114
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Originally Posted by hserus View Post
The previous insurer should have transferred it but it is too late now I think

Doesn't the NCB come with a validity of 3 years?
I got mine in 2015 Jan and is valid for 3 years.

However, I couldn't use it when I purchased my Zest as the dealer said I should have informed him prior about my 'transfer of NCB' to new car.
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Old 31st August 2016, 09:07   #115
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Default Re: Car Lease Options from your Employer

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Originally Posted by hserus View Post
The previous insurer should have transferred it but it is too late now I think

https://www.team-bhp.com/advice/no-c...nce-premiums-0

Read a few paragraphs down that article.
Not sure if it is too late.
Car is with me.
I have the policy, that included NCB.
Now, they are asking me to pay back the NCB.
I am disputing it. I have a letter from previous owner that the NCB can be transferred to my name. I submitted the same to my next insurer and he should have given it to the previous insurer and got the NCB transferred.
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Old 31st August 2016, 09:26   #116
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Default Re: Car Lease Options from your Employer

Quote:
Originally Posted by FORTified View Post
Not sure if it is too late.
Car is with me.
I have the policy, that included NCB.
Now, they are asking me to pay back the NCB.
I am disputing it. I have a letter from previous owner that the NCB can be transferred to my name. I submitted the same to my next insurer and he should have given it to the previous insurer and got the NCB transferred.
According to IRDA,

Quote:
Originally Posted by IRDA
NCB is given to the insured and not to the insured vehicle. Hence, on transfer of the vehicle, the insurance policy can be transferred to new owner but not the NCB. The new owner has to pay the difference on account of NCB for the balance policy period.The original owner can, however, use the NCB on a new vehicle purchased by him.
Hence, even if your company has no objection to transfer NCB, it cannot be done as per the IRDA regulations. When I brought my Celerio, I had to buy it in my mothers name since the 50% NCB on the WagonR would be valid only if the new car also was in her name.

Ideally, its like a reward for the owner for not claiming an incident and not a reward for the car for not being involved in an accident.
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Old 31st August 2016, 09:44   #117
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Default Re: Car Lease Options from your Employer

Here's the relevant section from that tbhp article, it looks right to me. If the op's employer doesnt mind ncb transfer then they just need to issue the relevant letter.

Quote:
NCB when transferring a company vehicle to the employee: People using an Employee Car Lease program have the option of getting the benefit of the No Claim Bonus at the end of the lease period.

The NCB can be transferred when the company is transferring the vehicle to the employee. There is an endorsement clause in the Indian Motor Tariff GR 27 (e).

(e) "The percentage of NCB earned on a vehicle owned by an institution during the period when it was allotted to and exclusively operated by an employee should be passed on to the employee if the ownership of the vehicle is transferred in the name of the employee. This will however require submission of a suitable letter from the employer confirming that prior to transfer of ownership of the vehicle to the employee, it was allotted to and exclusively operated by the employee during the period in which the NCB was earned."
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Old 31st August 2016, 09:55   #118
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Default Re: Car Lease Options from your Employer

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Here's the relevant section from that tbhp article, it looks right to me. If the op's employer doesnt mind ncb transfer then they just need to issue the relevant letter.
Thanks a ton!
The letter given by my employer reads exactly the same. It says they have no objections in transferring the insurance and No Claim Bonus to Mr.xxx, the user of the vehicle.
Raised a complaint with L&T Insurance. Need to wait and see what they will do.
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Old 23rd September 2016, 21:36   #119
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Default Re: Car Lease Options from your Employer

On the paper, a leased car and an own car are similar in terms of the cost involved. Own car has certain advantages to it, not being tied up to the company, first owner, flexible / floating interest rates, car of my choice. But the tax benefits in lease are too huge to ignore.

The biggest difference I think is - while the EMI, fuel bills, driver salary, maintenance etc are from a non-taxable income in lease, while they are in the taxable or 'taxed income' specifically.

Ex, if someone pay an EMI of Rs 10000 for lease, they save a tax of 2000/3000 as per the tax slabs (8000 or 7000). If they pay the same EMI 10000, for a bank loan, they need to earn 14285 (30%) or 12500 (20%) via salary or business (income before tax). So the effective cost saving is 14285 - 7000 = around 7000 Rs in EMI alone.

Same goes for fuel bills, maintenance, down payment, etc.

While lease has significant benefits for business men, I think salaried can use that as well if they a. want to buy a car b. doesn't have own funds to buy the car and needs to avail a bank loan.
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Old 24th September 2016, 08:10   #120
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Default Re: Car Lease Options from your Employer

Keeping the car on after the lease is what you must not do - you automatically become a second owner on paper though you have retained the car all along.

While the tax benefits are significant you must also take into account that you are actually paying out much more money for the vehicle due to higher than average interest rates at private sector leasing finance providers that companies routinely tie up with, compared to cheaper rates available from nationalised banks / using your own saved money to do an outright cash purchase in which case you will get fantastic deals compared to any financing.
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