[lancer_rit]

Originally Posted by hondadude

Not true. At least for mine and some other companies in bangalore, following applies if employees lease car (via the companies they work for)

1. EMI that employee pays is not taxable
2. If employee leases a car through the company, the amount of money spent on Petrol is tax exempt (up to a limit ofcourse)
3. Money paid on Insurance and Services is also tax exempt
4. Driver salary is also tax exempt.
5. The total money can be tax exempt for points 2, 3 and 4 above can't be more than 1.5 L

The only catch is that LeasePlan interest rates are a bit higher than market but overall it is a huge benefit for the employee.

Reviving an old thread.
@hondadude, do the above exemptions still hold currently for an employee taking car lease through their company ?
Also, are parts replacement, repairs etc part of #3 ?
In case one leaves the company in the middle of the lease period, what options are available ?
Did you avail of such a car lease, your experience if so ?
Cheers,

[aargee]

Originally Posted by lancer_rit

@hondadude, do the above exemptions still hold currently for an employee taking car lease through their company ?

No provided, the car maintenance, fuel reimbursements & tax benefits are available.

Originally Posted by lancer_rit

In case one leaves the company in the middle of the lease period, what options are available ?

1. Find someone who buys the car from you in the same company, so that, the ownership of the car remains almost the same & hassle free process
2. Buy back the car from company by settling your accounts or by paying the principle outstanding. Its upto oneself to sell or retain the car

[lancer_rit]

Originally Posted by aargee

No provided, the car maintenance, fuel reimbursements & tax benefits are available.

Err..., didn't quite get this part aargee - so the deductions are available or not available ?

[aargee]

Originally Posted by lancer_rit

Err..., didn't quite get this part aargee - so the deductions are available or not available ?

Deductions are available but are not reimbursed, instead considered as part of tax benefits.

[nowwhat?]

I guess there must be tons of leasing companies since the original post.

I just learned that my wife's company has tied up with ALD Automative and Arval (which belongs to BNP Paribas), two names that I had never heard before.

Does anyone know if there is an option to keep the lease in case someone changes jobs and the same leasing company runs the car lease program in the new company?

Also is there any way to transfer the lease to some other leasing company?

[GTO]

Does anyone know if there is an option to keep the lease in case someone changes jobs and the same leasing company runs the car lease program in the new company?

Also is there any way to transfer the lease to some other leasing company?

Never heard of it. The actual agreement is between the leasing organisation and your employer, so I don't think its possible.

[nowwhat?]

Ok folks I really need your help on this one.

I received a quote yesterday from one of the leasing companies for a Xylo E8 with ABS (not sure whether to buy with airbags, but that's another question).

They have given a breakup of the cost of the car as Rs. 8,31,445 plus KA Road Tax of Rs. 1,38,201 for a total of Rs. 9,69,646. This is after the going discount of 27K. The quote is identical to what the dealer gave me.

Now as per the leasing company's quote, my monthly outflow is as below.

Lease Rental 20,908.17
VAT 2,822.60
Fleet Management Charges 3,667.54
Service Tax 366.75
Education Cess 11.00
Total Lease Rental Rs. 27,776.06 each month

Now the way I look at it since the lease is for an initial period of 3 years, my total outflow would be Rs. 9,99,938, i.e. more than the cost of the car. The kicker is that after the 3 years are over I still do not have the car. I asked how much it would cost to own it and they said they will take 3 quotes from used car dealers on expiry of the lease and I can buy the car for 1 rupee more than the highest quote.

I feel the car may retain at least 60% of its value after 3 years (not sure if the comparison to Esteem is valid). If the residual value if 60% or 50%, I feel leasing is way too expensive.

I do understand I have some benefits:

1. Part of the leasing expense for me would be pre-tax. Assuming all of it is pre-tax, my monthly outflow in effect may come down to a max of Rs. 19,443 per month for a total of Rs. 6,99,956 at the highest tax slab.

2. The company would pay Rs. 15,000 annually for fuel.

3. Maintenance charges of say Rs. 15,000 a year are free.

4. Insurance of Rs. 20,000 odd is free. But this may be less if I claim the NCB.

Now for the MILLION RUPEE question: Considering the numbers above, should I finance the car through lease or loan? Why?

[lancer_rit]

Wrt the posts about the new direct tax code (that's still changing as per today's ET article), what is the conclusion on the tax treatment of the lease payments ? Will this end (as a few seem to have posted) in 2011 ?

[GTO]

Originally Posted by nowwhat?

Now as per the leasing company's quote, my monthly outflow is as below.

We cannot really compare with only a single (lease) quote. Get a quote for financing as well. That's the only way to enlist the pros & cons of each.

I asked how much it would cost to own it and they said they will take 3 quotes from used car dealers on expiry of the lease and I can buy the car for 1 rupee more than the highest quote.

Rubbish, they are playing you. The rate at which you buy back the car from the lessor is agreed upon at the start of the lease. In fact, that's a contributing factor to the monthly lease calculations. I'm very surprised at their shoddy approach. What organisation is this?

[ph03n!x]

Here is what I have from Orix:

Car: Getz CRDi
When: June 2009
OTR: 4,99,900 + 48,500 (ex-showroom+registration/tax et all) + 13,526 (insurance) (Chennai)
Initial hole burnt in pocket:It was 49,990 for the 10% down payment, and 13,526 for the insurance
Monthly outflow: 16,695 for 3 years for the lease (not taxed). An additional 6,000 per month is also held back by the company (not taxed). I can submit fuel bills / insurance premium to claim the multiples of 6,000 any time in the financial year. If I do not, the residue is taxed.
After lease duration is over: I pay 71,992 (residual value) and transfer the car to my name.
Tax benefits per year: 2,72,340 not taxed. Of this 72,000 of this is claimable by submitting bills.
Total outflow: 6,01,020 (16,695*36) + 71,992 (RV) + 49,990 (10% down payment) = 7,23,002
Additional amount I pay in 3 years: 7,23,002 - 5,48,400 = 1,74,602, which is about 58,200 per year (about 12% of the financed amount - 4,98,410).
Tax saved per year: 30% of 2,72,340 = 81,702

Originally Posted by GTO

Rubbish, they are playing you. The rate at which you buy back the car from the lessor is agreed upon at the start of the lease. In fact, that's a contributing factor to the monthly lease calculations. I'm very surprised at their shoddy approach. What organisation is this?

+1 to that! @nowwhat- the lease plan you have described seems to be a daylight robbery. Get a better deal / better lease company

[nowwhat?]

Hi GTO,

Thanks for your reply. I had almost given up waiting for a response.

Originally Posted by GTO

We cannot really compare with only a single (lease) quote. Get a quote for financing as well. That's the only way to enlist the pros & cons of each.

You are absolutely right. I will get a quote for financing right away.

Originally Posted by GTO

Rubbish, they are playing you. The rate at which you buy back the car from the lessor is agreed upon at the start of the lease. In fact, that's a contributing factor to the monthly lease calculations. I'm very surprised at their shoddy approach. What organisation is this?

OK, I have been trying to get the residual value (RV) from the 2 companies mentioned in one of my earlier posts and both have declined to state the RV.

Out of desperation I gave the rates & RVs quoted by Sundaram to another Team-BHP member and my leasing company came back saying that Sundaram does "finance lease". I guess my wife's company does an "operating lease", neither of which I understand. This is the reply I got.

The detail you have sourced from Sundaram is called as finance lease options which we do not offer since 2006. However the finance lease options is not opted by <Company>, because in a finance lease the asset get booked in the books of lessee (i.e. <Company>) which most of the companies like Accenture, HP, etc. are not keen for various accounting reasons.

Finally I said that not knowing the RV is a show-stopper for me as I fully intend to buy the car at the end of the lease and on the phone I have now been told that the RV will be 41% of the ex-showroom price (i.e. minus KA Road Tax) on average. He also sounded a bit heroic by saying that they use 41% as RV in their internal calculations, but if the quote they get is 35% at the end of the lease then they lose the 6% from their pocket.

I seem to be really swimming out here. Pls help. If anyone desires I can email the quote.

Another thing: Since my wife is a senior HR person in the organization it may be possible to enlist another vendor. Any suggestions are welcome.

[Newpunter]

In my company, the RV is calculated as 26% of the Base Price for a tenure of 36 months. The Base price is the ex-showroom price minus the tax. So the 41% they are quoting is quite high, unless the tenure is for an even lesser period ( which i doubt ).

[Guna]

Originally Posted by nowwhat?

Now the way I look at it since the lease is for an initial period of 3 years, my total outflow would be Rs. 9,99,938, i.e. more than the cost of the car. The kicker is that after the 3 years are over I still do not have the car. I asked how much it would cost to own it and they said they will take 3 quotes from used car dealers on expiry of the lease and I can buy the car for 1 rupee more than the highest quote.

Originally Posted by GTO

Rubbish, they are playing you. The rate at which you buy back the car from the lessor is agreed upon at the start of the lease. In fact, that's a contributing factor to the monthly lease calculations. I'm very surprised at their shoddy approach. What organisation is this?

I guess there are two types of lease with respect to the future ownership. One, where the person who has opted for the lease gets to buy the car at
the residual value. Other, where the lease company puts up the car for auction, and anybody can buy. To me this looks like the second type where you can buy the car only if you are the highest bidder(which is where you have 3 quotes from used car dealer).
I have seen both these types in my previous company (they had the first type and switched to the second type later)
The second type IS NOT WORTH CONSIDERING.

[nowwhat?]

Originally Posted by Newpunter

In my company, the RV is calculated as 26% of the Base Price for a tenure of 36 months. The Base price is the ex-showroom price minus the tax. So the 41% they are quoting is quite high, unless the tenure is for an even lesser period ( which i doubt ).

Yes, 41% is after 3 years. If the leasing company gets 3 quotes from used-car dealers, honestly I don't think the price after 3 years will be 41% of the ex-showroom price.

I mean, how many cars depreciate 59% in 3 years? If I take the KA road tax into account, that means the car has depreciated by 65% in 3 years (eg Rs. 10 lakh car for Rs. 3.5 lakhs after 3 years). I wonder what kind of an used-car dealer will deliberately low-ball their quote so much.

Could you please PM me the name of the leasing company your organization has tied up with? I really wonder if all the operating lease options are as bad as the ones I got.

Originally Posted by Guna

The second type IS NOT WORTH CONSIDERING.

If even a couple of others chime in, that's the end of the road for me perhaps as far as the lease option is concerned.

[nowwhat?]

Originally Posted by ph03n!x

Here is what I have from Orix:

Car: Getz CRDi
When: June 2009
OTR: 4,99,900 + 48,500 (ex-showroom+registration/tax et all) + 13,526 (insurance) (Chennai)
Initial hole burnt in pocket:It was 49,990 for the 10% down payment, and 13,526 for the insurance
Monthly outflow: 16,695 for 3 years for the lease (not taxed). An additional 6,000 per month is also held back by the company (not taxed). I can submit fuel bills / insurance premium to claim the multiples of 6,000 any time in the financial year. If I do not, the residue is taxed.
After lease duration is over: I pay 71,992 (residual value) and transfer the car to my name.
Tax benefits per year: 2,72,340 not taxed. Of this 72,000 of this is claimable by submitting bills.
Total outflow: 6,01,020 (16,695*36) + 71,992 (RV) + 49,990 (10% down payment) = 7,23,002
Additional amount I pay in 3 years: 7,23,002 - 5,48,400 = 1,74,602, which is about 58,200 per year (about 12% of the financed amount - 4,98,410).
Tax saved per year: 30% of 2,72,340 = 81,702

I think this must be a "finance" lease as the quotes I received have 0 down payment and free insurance. But I got to say what you have looks like a great deal.

Does anyone know of any leasing company that does "operating" lease where the resale value is specified at the start of the lease?