• Buying car in the name of LLP where I am a partner vs buying a car in the name of individual

I am a resident Indian partner in LLP (India) and want to buy a car, if i buy in my name the on road price of car is 13.53 lakhs and in the name of LLP the cost increases by 95k to 14.48 lakhs. In both case assumes i avail a loan @ 8% p.a. for 5 years. Need to understand cost and benefits under both option and preferable route i should go for.
Asked 3 months ago in Income Tax

Dear Sir,

 

Hope you are doing well !!

 

Tax benefits on car loan depends on uses of car.

 

Car Loan can help you save on tax If you are a self-employed professional or business owner and use the car for business purposes. But a salaried employee cannot claim tax deductions on Car Loan interest repayments like with a Home Loan. The reason behind this is that a car is considered as a luxury product.

 

Also, If a Car is used for business purposes, then Depreciation on Car can be claimed as an expense. This depreciation is allowed to be claimed irrespective of whether the car is purchased through loan or without a loan.

The depreciation on Car is allowed to be claimed @ 15% every year. This will again reduce the taxable profits even further and decrease the tax liability.

 

We may assist you in entire planning.

 

It is advisable to take a phone consultation for detailed discussion.

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

Hi

 

If the car is being purchased in the name of the LLP and it is used for business purpose, the company will get tax benefits on depreciation and interest paid on loan.

We may assist you with such cost benefit analysis. Kindly contact personally. 

 

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

- Out of cost of 13.53 lacs or 14.48 lacs, around 3.16 lacs will be GST component for which you will not get any benefit of ITC in GST. In case of LLP, entire cost will be capitalised in the books of accounts and only benefit of depreciation and interest on loan is available. AO has power to disallow between 20-30% as a personal expense. You have to compare total increase in cash outflow due to increase in cost of 98K and interest component and tax saving from depreciation and interest on loan.

 

For detailed discussion, please contact personally.

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

Good Morning 

 

if car is using for business purposes then it’s advisable to purchase in the name of LLP Firm because by doing this you can claim interest as well as Depreciation as expenses and save income tax 

Lalit Bansal
CA, Delhi
739 Answers
53 Consultations

5.0 on 5.0

Even if the price of car increases but taking it in name of LLP would save tax in many ways:

1. GST could be claimed as expense.

2. Interest on loan as expense.

3. Depreciation

 

We can discuss more over call.

I hope you find the information helpful if you do please rate it 5 and to discuss further you can book a phone consultation.

 

Thank you

Naman Maloo
CA, Jaipur
3791 Answers
45 Consultations

5.0 on 5.0

Hello Sir,

 

It is advisable to purchase the car in the name of LLP so you can get the deduction of interest and depreciation.

 

It will more beneficial to you.

Karishma Chhajer
CA, Jodhpur
2387 Answers
20 Consultations

5.0 on 5.0

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