tax benefits of using a car

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Tax benefits of using a car A person can have several resources at a same time and allowed as a tax deduction in the business income of an individual. It seems easy and lucrative for a lot of people, but it requires a proper understanding of the process to become eligible. There are several conditions that would need to be met to become actually eligible. Now take example of a Car that is purchased and all the expenses for which you sought tax deduction as a business resource. Advantage restricted It is not applicable to everyone. It is restricted to those who earn income under specific heads. If you are a salaried employee and bought a car and sought tax deduction benefits on this expense then the expenses on this cannot be reduced from the salary you earn. It is applicable only to a businessman because a businessman can use this car for his/her employee’s transportation facility. It means he/she is not using it for his/her personal use.

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Page 1: Tax benefits of using a car

Tax benefits of using a car

A person can have several resources at a same time and allowed as a tax deduction in the business income of an individual. It seems easy and lucrative for a lot of people, but it requires a proper understanding of the process to become eligible. There are several conditions that would need to be met to become actually eligible. Now take example of a Car that is purchased and all the expenses for which you sought tax deduction as a business resource.

Advantage restricted

It is not applicable to everyone. It is restricted to those who earn income under specific heads. If you are a salaried employee and bought a car and sought tax deduction benefits on this expense then the expenses on this cannot be reduced from the salary you earn. It is applicable only to a businessman because a businessman can use this car for his/her employee’s transportation facility. It means he/she is not using it for his/her personal use.

Page 2: Tax benefits of using a car

Purchase

This detail is the most important aspect that is missed by a lot of people. The asset should be in the name of the business not on the person’s name or someone other. It ensures the source of amount.

It will allow the benefit of depreciation to the owner of asset. The asset should not be in the name of other person otherwise business owner will not liable for the benefit of depreciation.

For purpose of Profession

The resource should be used for only business purpose, not for personal use. One cannot set off personal expenses with the income incurred on the asset. If the asset is used for personal as well as business purpose then the total amount that has been spent would be separated in a specific ratio depending on the usage for each of these purposes.

Other expenses

Several other expenses which are associated with the running of asset would have to be allowed as a deduction. For example, the running and maintenance cost of car comes under tax deduction. The benefit of depreciation is allowed every year depending on the market value of asset since the asset purchased. It is a big relief for the person or the entity that is using this asset.

There are so many tax advisors are available in India and other parts of world that provides audit service. You can get these tax benefits on various resources by getting suitable advice from expert tax consultant of your area.