Why corporate car lease is NOT worth for long term

Corporate car lease program is projected as a tax saving option. Because lease rental paid is excluded from your taxable income, employees get to save some 30-33% right away if they are in highest tax bracket. But truth is only 2% of cars sold in India are sold on lease. Why aren't salaried folks rushing to take cars on lease instead of buying them with the post tax income?

This is because there are some major concerns that nullify the tax benefits...

Concern 1: Lease rental will be 1.5-2x EMI amount: as lease rental company also has to make a profit besides the bank. So all the income tax you saved will be taken away in lease rental. After paying all EMIs you fully own the car, but even after paying lease rent for 3-4-5 years, you won't own the car- you will still have to pay what is called residual value.

Concern 2: Residual value: Residual value will be kept very high- almost 50% of original price after 3-4 years. Having paid 2x the EMI amount, having to pay 50% again as Residual Value (which will be from your taxable income) will again nullify the tax advantage.

Residual value is not told upfront. You will assume it will be very small amount, but lease rental company will ask maximum amount or will take the car back- they also have to make a few lakh profit per car- so it is their leverage. 

Concern 3: Restrictions. Unlike a car you own, lease rental will have several restrictions

• You can't add accessories
• Yearly usage is limited to 10000, 15000 or max 20000 kms
• Though maintenance is claimed to be included, several things are often excluded in fine print- like tyres etc 
• Your own car you can chose to skip own damage insurance- lease rental you can't.

Let me know what you think.