Claim audit · FY 2026-27
“Buy the car in your company's name and write it all off”
The condition that decides it
Depreciation (15%) and running costs are deductible only to the extent of business use; personal use is a taxable perquisite (Rule 3). GST input credit on cars is blocked u/s 17(5) CGST except for specified uses. For director shareholders, funding routes can trigger 2(22)(e) deemed dividend.
What the department sees
Company books, perquisite in Form 16, GST returns
Data the Income-tax Department already receives automatically — the reel doesn't mention this part.
The real math
The reel implies ₹10,00,000 paid by a company creates a ₹10,00,000 deduction. The statute-based arithmetic is narrower. At 15% WDV depreciation, ₹10,00,000 × 15% = ₹1,50,000. If records support 60% business use, deductible depreciation is ₹1,50,000 × 60% = ₹90,000; ₹60,000 is the personal-use share. Fuel, insurance and driver costs also require apportionment. If personal use is provided to an employee-director, Rule 3(2) perquisite valuation is relevant; the annual range is ₹1,800 × 12 = ₹21,600 to ₹3,300 × 12 = ₹39,600. GST ITC for a vehicle up to 13 seats is blocked under CGST section 17(5), subject to specified exceptions. A loan or advance to a 10%+ shareholder can also trigger section 2(22)(e). Tax saved then depends on the business tax rate, the full running costs and any GST credit forgone.
Questions people actually ask
There's a right way to do this
Does buying the car in the company's name really save tax?
Sections: 32, 17(2), Rule 3, CGST 17(5), 2(22)(e) · We audit claims, not creators. Reviewed by Harun Raaj & Associates, Chartered Accountants · All audited claims