Car Lease Policy in India: Can Anyone Share Their Insights and Experiences?

Can I have some insights on the car lease policy (pertaining to India)?

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Hi Shilps_mona,

"Can I have some insights on the car lease policy (pertaining to India)?"

There are two transactions. First - The car is bought in the name of the employee's close person, in whose name the company provides the car lease rent, thereby maintaining an arm's length transaction. Second - hire a professional agency like Orrus, which provides the car to employees on behalf of the company, with the option that after three years, the car is sold to the employee at the written-down value.

Regards,
Rajat

Hi Shilps_mona,

"Can I have some insights on the car lease policy (pertaining to India)?"

There are two transactions:

First - The car is bought in the name of the employee's close person, in whose name the company provides the car lease rent, thereby maintaining an arm's length transaction.

Second - Hire a professional agency like Orrus, which provides the car to employees on behalf of the company. This option allows that after three years, the car is sold to the employee at the written-down value.

Regards,
Rajat

Hi Shilps_Mona,

"But for the benefits for the employee. Why would he/she go for the same thing?"

Both are different schemes. Usually, they differ in the following ways:

First scheme - one gets the benefit of the car and gets paid indirectly, which attracts TDS of 2.4% on the bill.

Second scheme - is where the company doesn't have the liability or doesn't want to show such assets, then this scheme is preferred. Also, as a retention strategy, he/she can buy the car at the WDV.

Regards,
Rajat

Following policies are applied if the applicant is applying for a leasing vehicle.

a) Policy applicable to those staff who have completed two years.

b) The leasing is for a maximum of 3 years.

c) The company deals with a contract with a leasing company/bank to provide vehicles to their staff. The company only provides the guarantee while the interest and actual amount MUST be paid by the applicant.

d) Upon termination/resignation of services, the company is responsible for updating the leasing company/bank about the employee's status. It will then be up to the bank/leasing company to demand the remaining amount from the employee, continue the leasing service, or ask for any other guarantee.

e) The company will not release the employee's end-of-service benefits until the employee brings clearance from the leasing company (as the company has provided the guarantee).

f) The monthly leasing amount MUST not exceed 25% of the employee's salary.

Please help me. What are the implications if we adopt this?

Car is bought in the name of the employee's close person in whose name the company provides the car lease rent, thereby maintaining an arm's length transaction.