If your employer provides you with a vehicle for work or personal use, it can impact your taxable income in Pakistan. Here’s a breakdown of how the tax is calculated:
Conveyance Allowance vs. Company Vehicle:
- This information applies to situations where your employer provides the actual vehicle, not a cash allowance for transportation.
Taxation Based on Usage:
- Partial Business & Personal Use: If you use the company vehicle for both work and personal purposes, the taxable value is 5% of the vehicle’s cost or lease price at the start of the lease.
- Solely for Personal Use: When the vehicle is exclusively for personal use, 10% of the vehicle’s cost or lease price at the start of the lease becomes taxable income.
Understanding the Calculations:
- The taxable amount is added to your regular salary for income tax purposes.
- This increases your overall taxable income, potentially affecting your tax bracket and the amount of tax owed.
What about the tax on authorized fuel to the employee e.g 300 litres a month for his company maintaied car?