Choosing the Right Vehicle Option Under New Tax Regime to Minimize Income Tax Liability

Tax Planning in the New Regime: Maximizing Benefits from Company Cars

For most salaried employees, a company car is a convenient perk that makes commuting easier without a significant impact on their pocket. However, under the new tax regime, which has eliminated most deductions, the way a company car is structured can make a significant difference in tax outcomes.

Optimizing Tax with Car Benefits

Depending on the structure of the car benefit, the same salary can lead to significantly different tax outcomes, making it one of the few remaining ways to optimize tax without additional investments. Car benefits, whether through a lease, employer-provided vehicle, or reimbursements, can make a real difference in tax planning.

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Comparison of Car Options and Tax Outgo

Self-Owned Car

In the case of a self-owned car used for both official and personal purposes, the taxable value is not limited to the fixed perquisite amount. Instead, the taxable amount is calculated as the actual reimbursement received from the employer, reduced by the prescribed fixed value depending on the cubic capacity of the vehicle.

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Key Takeaway

Under the new regime, tax planning is no longer about claiming deductions after earning a salary. It is about designing the salary in a smarter way. A company car, particularly through a lease model, is one of the few remaining tools that allows this kind of optimization. When routed efficiently through employer-backed components like a car lease, the same salary can result in substantially lower tax outgo without reducing actual benefits.