Employer-Provided Car Perquisite: ₹1,800, ₹2,400 and Chauffeur Rules

For mixed official/personal use where the employer owns the car and pays running costs, the taxable monthly value is ₹1,800 for engine capacity up to 1.6 litres or ₹2,400 above 1.6 litres, plus ₹900 for a chauffeur.

Legal or Computational Framework

Governing rule

Official-only use can be nil with prescribed records; personal-only use uses actual employer cost/hire, chauffeur and 10% wear-and-tear less recovery. Employee-paid running costs use lower mixed-use values.

Correct calculation method

Identify ownership, engine size, payer of running cost, use category and chauffeur; maintain logbook/certificate for official use; subtract employee recovery where permitted.

Step-by-step workflow

1. Identify ownership, engine size, payer of running cost, use category and chauffeur.
2. maintain logbook/certificate for official use.
3. subtract employee recovery where permitted.
4. Reconcile the input with official statements and supporting records.
5. Calculate both legal eligibility and final tax impact.
6. Record the effective date and review trigger.

Worked example

A 2-litre employer-owned car with employer-paid costs and chauffeur used partly personally gives ₹3,300 per month taxable perquisite.

The example is an illustration, not a substitute for the taxpayer's facts. A change in status, period, payment mode, document, city, asset, relationship or scheme can change the result.

Why generic pages get this wrong

Search pages often state a rate or limit without identifying the governing base. The calculation must distinguish gross receipt from taxable profit, tax from TDS, a deduction from an exemption, salary from business income, and an accounting entry from the tax treatment.

Decision matrix

Entity and topical coverage

This page is written around the entities and concepts search engines expect for the topic: Rule 3, perquisite, rent-free accommodation, company car, salary. They are used only where relevant and are connected to the live calculator and knowledge hub rather than repeated mechanically.

Use the ITR Form Selector — AY 2026–27 to work through the related inputs before acting.

What Generic Pages Miss

For the connected rule, example or next step, see ESOP and RSU Payroll Perquisite: Employer Evidence Checklist.

Practical Documentation Checklist

• Employment/lease agreement
• Salary definition working
• Occupancy dates
• Employee rent recovery
• Furniture cost/hire record
• Form 12BA

For the complete rules on this topic, see the core guide: Perquisites Taxation: Rent-Free Accommodation, Company Car & Other Benefits.

See the broader Income Tax & Salary knowledge hub for related rules and calculators on this topic.

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