Tip Tuesdays: It’s Not Worth Complicating The Situation Just So That You Can Avoid Paying Some Income Tax

by Vinaya HS on June 22, 2010

in Finance

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In an article on taxation, Outlook Money — June 16, 2010, suggests:

Buy your car in your spouse’s name. Then lease it to your company, which in turn can let you use it as an employer-provided vehicle. [Due to certain deductions, you reduce the amount of income tax that you need to pay.]

I’ve also seen variations of this theme that suggest buying your car in your father’s or mother’s or relative’s name. I honestly believe that it isn’t worth structuring your vehicle ownership this way just so that you can avoid paying a certain amount as income tax. That said, in general, you should never monetarily tie yourself to your employer — be it the mechanism: employer loans, car leases, and such.

Keep the car in your name. Pay income tax. Sleep without worry. That’s what I would advise.

What do you think?




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{ 1 comment… read it below or add one }

Atul March 16, 2011 at 4:47 PM

Hi Vinay,

There is nothing wrong in this approach. I am doing the same for last few years . Have verified through CA and its perfectly within legal boundaries.

If you want to save taxable component in your FBP then this approach works.

Regards

Atul

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