Vehicle · perquisite
Employer-leased car
A car leased by your employer for your use is valued at the same prescribed rates as an owned car, not at the lease rental.
How the taxable value is determined
The prescribed monthly values apply (₹1,800 up to 1600cc, ₹2,400 above, plus ₹900 for a driver) regardless of what the lease costs your employer — which is what makes a leased car efficient where the rental exceeds the prescribed value. Amounts recovered from you reduce the perquisite.
Regime availability
- Old regime
- Prescribed value applies
- New regime
- Prescribed value applies
Documentation to keep
Lease agreement, salary-deduction records for any recovery, and a logbook if official use is claimed.
Legal basis: Rule 3(2), Income-tax Rules
Frequently asked questions
Is employer-leased car taxable in India?
A car leased by your employer for your use is valued at the same prescribed rates as an owned car, not at the lease rental. The prescribed monthly values apply (₹1,800 up to 1600cc, ₹2,400 above, plus ₹900 for a driver) regardless of what the lease costs your employer — which is what makes a leased car efficient where the rental exceeds the prescribed value. Amounts recovered from you reduce the perquisite.
Does the exemption apply under the new tax regime?
Under the old regime this treatment is not applicable — the value is prescribed, not exempted; under the new regime it is not applicable — the value is prescribed, not exempted. Legal basis: Rule 3(2), Income-tax Rules.
What records should I keep for employer-leased car?
Lease agreement, salary-deduction records for any recovery, and a logbook if official use is claimed.
Related tools & guides
Reflects provisions in force for FY 2026-27; verify against the latest government publications (incometax.gov.in). Information, not tax advice.