Company car for the director — a big legitimate saving

✍️ EaseValue Advisors · Updated 17 Jul 2026 · FY 2025-26

In short

A car owned or leased by the company and used by you attracts only a nominal perquisite (₹1,800–2,400/month), while the company deducts depreciation, fuel, driver and insurance — far cheaper than buying it from taxed income.

The perquisite value

Engine ≤ 1600cc: ₹1,800/month; > 1600cc: ₹2,400/month; add ₹900/month if the company provides a driver.
That small monthly value is all that's taxed in your hands, even if the car is worth ₹20 lakh and the company pays all running costs.

What the company deducts

Depreciation on the car (15%), fuel, maintenance, insurance and the driver's salary — all business expenses.

The condition

The car must be used for official purposes (with some personal use); keep it in the company's books. Buying the same car personally gives you no deduction and no perquisite benefit.

The law behind it

Section 17(2) Rule 3(2)

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General information for FY 2025-26 (AY 2026-27), not advice on your specific case. Limits, rates and conditions change with each Finance Act and depend on your facts — confirm before acting. © EaseValue Advisors LLP.

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