Example:-X is employed by a company. He has been provided a car (1200cc) owned by employer, cost of the car is ₹ 4,26,000. The expenditure incurred by the company on maintenance of the car are – petrol: ₹ 46,000, driver: ₹ 36,000 and maintenance: ₹ 10,000. The car can be used by X partly for official purposes partly for personal purposes. A sum of ₹ 12,000 is recovered from X.

Perquisite valuation of employer provided motor car treats engine capacity, driver cost, recoveries and private use depreciation.

Perquisite valuation for employer provided motor cars uses a fixed monthly valuation for car and driver where engine capacity falls below the higher threshold; recoveries from the employee do not reduce that fixed valuation. If the vehicle is used exclusively for private purposes, the taxable perquisite is calculated as annual depreciation plus petrol, driver and maintenance costs, minus any amount recovered from the employee.