Example:-X owns car (1400cc). He uses it partly for official purposes and partly for private purposes. During the previous year 2014-15, he incurs a sum of ₹ 40,000 on running and maintenance of car. Besides, he has engaged a driver (salary ₹ 24,000). The employer reimburses the entire expenditure of ₹ 64,000. Log book of the car is not maintained.

Chapter No. 14 - Salary - Perquisites - Motor Car - (Rent Free / Concessional) - Rule 3(2)

Value of perquisite shall be determined as follows:

Amount reimbursed by the employer                                                            64,000

Less: Deduction for official use ( 1800 x 12 + 900 x 12 )                               32,400

Value of perquisite                                                                                        31,600

If in the above example, the logbook of the car is maintained and 70 percent of the expenditure is attributable towards the official use of the car.

The value of perquisite shall be determined as follows:

Amount reimbursed by the employer                                                            64,000

Less: Amount for official purposes (70% of 64,000)                                       44,800

Value of perquisite                                                                                        19,200

Dated: 11-8-2015