How LeaseBridge Works

LeaseBridge operates under well-established provisions of Indian law. The accommodation and car perquisite structure has existed since the Income Tax Act, 1961. Rule 15 of the Income Tax Rules, 2026 (the successor to Rule 3 of the 1962 Rules) provides a complete statutory valuation mechanism for employer-provided assets — no market rent test, no approval required, no new tax benefits created.

LeaseBridge productises what has historically been available only to senior executives at large corporations. Every Indian employer can lawfully provide cars and residential accommodation as perquisites and deduct the lease rental from the employee's gross CTC before income tax computation. The perquisite value — fixed by statute under Rule 15 at ₹2,000/month for EVs (₹5,000/month for ICE ≤1,600cc) for cars and 10% of salary for houses — is included in the employee's taxable income and reflected in Form 16.

Each asset (car or house) is purchased by a dedicated Special Purpose Vehicle (SPV) — a Private Limited Company incorporated under the Companies Act, 2013. The SPV is funded by our NBFC partner via an inter-company arrangement.

The SPV leases the asset to the employer. The employer provides the asset to the employee as a perquisite under Section 17(2) of the Income Tax Act. At lease end, the SPV is dissolved under Section 455 — a standard voluntary strike-off procedure. On dissolution, the asset vests in the employee as sole shareholder.

This is a distribution, not a transfer — zero stamp duty applies. No RTO transfer is required for vehicles. No property transfer is executed for houses.

For professionals earning ₹30 Lakh+ per year, the home lease structure under IT Rules 2026 delivers the largest annual benefit. Here's why: the taxable perquisite for employer-provided housing is fixed at 10% of your basic salary — completely unchanged by the 2026 rules while car perquisites tripled. A ₹1 Crore home leased through your employer saves ₹2–4 Lakh per year in tax, and the property becomes yours at ₹1 when the SPV dissolves.

Example: ₹40L CTC, ₹16L basic salary, ₹1Cr home in Mumbai. Annual lease: ~₹8,40,000 (pre-tax deduction). Perquisite added back: ₹1,60,000 (10% of ₹16L basic). Net pre-tax benefit: ₹6,80,000. Tax saving at 34.32% marginal rate: ₹2,33,376/year. Over a 20-year lease: ₹46+ Lakhs total — and the property is yours at ₹1.

The housing perquisite is calculated on basic salary only (excluding HRA, allowances, bonuses). This means the benefit scales with the lease value, not your total CTC — making it extraordinarily efficient for higher-value properties.

Under Rule 15 (IT Rules 2026, effective 1 April 2026), the perquisite value of a car is: EV ₹2,000/month · ICE ≤1,600cc ₹5,000/month · ICE >1,600cc ₹7,000/month. For residential accommodation, the perquisite is 10% of salary (metro cities), 7.5% (Tier-2), or 5% (Tier-3) — housing rates are unchanged.

This statutory rate applies regardless of the actual lease amount paid by the employer. You include only this fixed perquisite in your taxable income — the balance of the lease deduction reduces your taxable CTC directly.

Example: Someone earning ₹18L CTC with a ₹15L EV on a 4-year lease has ~₹4,60,000 deducted from gross CTC pre-tax. Only ₹24,000 (₹2,000 × 12) is added back as taxable perquisite. Net taxable income reduces from ₹18L to approximately ₹13.8L.

LeaseBridge structures are not tax avoidance arrangements. The SPV is a genuine lessor — it earns rental income, files income tax returns, and maintains proper accounts. The employer is a genuine lessee with a registered lease agreement. The employee is a genuine beneficiary under a lawful employment benefit.

The General Anti-Avoidance Rule (GAAR) under Sections 95–102 of the Income Tax Act requires arrangements to lack commercial substance to be impugned. LeaseBridge arrangements have clear commercial substance: the SPV owns a real asset, earns real rental income, pays advance tax on that income, and operates at arm's length with all parties.

All transactions are conducted at Fair Market Value as determined by a SEBI-registered Registered Valuer. Structures are supported by legal opinions from empanelled senior counsel at AZB & Partners, Cyril Amarchand Mangaldas, and Khaitan & Co.