Device leasing: tax-efficient perks under new tax regime

Lease payments are deducted from pre-tax salary, boosting tax savings, more so for those in higher tax bracket

- Neil Borate & Anil Poste

Most employees have transitioned to the new regime for lower tax rates without investments, but at the cost of tax benefits like meal cards. However, the new regime still allows employers to reimburse the cost of mobile phones, laptops, or car leases if they are used for official purposes. Some companies allow you to buy these devices after 12 months of use. This is one hidden benefit that you can unlock as an employee in the new regime.

How does it work?

A phone or laptop can be leased through a bi-party agreement between the employer and a leasing company, which buys the device and rents it to the employer. The employee then uses it for work and after 1-2 years, it is usually sold at a discount, said Vardhan Koshal, the founder of asset leasing firm Tortoise.

The device leasing process begins with the leasing company reaching out to a corporate client—let's say, ABC Ltd—with a proposal to offer a device leasing programme for its employees.

"The leasing firm evaluates the financial credibility of the corporate client, not the individual employees. Once approved, a rental agreement is signed between the leasing company and the corporate entity," according to Tarun Soni, founder and chief executive of asset leasing company Astrafin.