Smart Tax Hack For Cars (Image Source: Internet)
New Delhi: Often when people plan to buy a car, their focus is only on price and features. But one big thing that gets ignored is tax. When buying a car, you have to pay heavy taxes, which increases the total expense significantly. In such a situation, if proper planning is done then this tax can be reduced to a great extent.
Car leasing means renting a car instead of buying it. In this, you pay a fixed amount (like EMI) every month, but the car is not in your name. It remains in the name of the company from which you have taken the lease.
However, as long as you make your lease payments, you have use of the car, just like living in a rented house.
The biggest advantage of car leasing is tax savings. Many companies offer car lease option to their employees. In this, the cost of the car is adjusted in your salary structure.
A portion of your gross salary goes towards car lease. This reduces your taxable income. The company can also bear the expenses related to the car like fuel and driver's expenses. Tax is calculated based on the rules rather than the actual value of the car, which is often lower.
In this way you can save tax up to lakhs of rupees every year.
Taking a car on lease not only saves tax but also reduces your daily expenses. Maintenance is often the responsibility of the company or lease provider You don't have to spend a huge lump sum.There is also an option to get a new car every few years.
In the new tax regime, the government has reduced the tax rates, but along with it many types of exemptions have also been reduced. This means that now people will have to look at smart salary structures and benefits, like car leasing, to save tax.
If you are thinking of buying a car, then definitely look at the option of leasing instead of buying outright. If planned properly, it will not only reduce your expenses but can also give you huge tax benefits.
