Astrology

Tax benefits on electric vehicles in India

December 22, 2021
Bharat Times

Electric cars are still not as cost-effective as they are in developed countries. To help with this, the Government of India is progressively taking steps to accelerate the adoption of EVs.

EVs, or electric vehicles, are not only useful for the environment; They are more effective than conventional fuel based cars. In addition, the steady rise in fossil fuel prices has allowed car buyers to look for alternative vehicles.

Note that EVs may initially cost more than normal vehicles, but they provide decent returns. For example, there is no need to refuel your vehicle from time to time. You have to charge the car to get the desired mileage.

Note that EVs also come with tax benefits in India. There is no dearth of electric vehicles in India at the moment. In addition, with the increased sales, manufacturers are introducing new types of models in the market. But did you know that EV owners can take advantage of exciting tax benefits from the industry? let’s find out!

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Overview of Tax Deduction on Loan for EVs

As per section 80EEB, buyers will get total exemption on taxes up to INR 150000 on repayment of EV loan. Note that this tax deduction is applicable for both two wheelers and four wheelers. Let us have a look at the features of Section 80EEB.

eligibility

Note that this tax deduction is available to individuals only. In other words, this deduction is not applicable to any other taxpayer. For example, if you are a partnership firm, company or any other type of taxpayer, you will not be able to avail.

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total deduction amount

Under section 80EEB, deduction of interest payment up to INR 150000 is available. This deduction will greatly help the car buyer to claim the interest paid on the vehicle loan. In simple words, the deduction amount helps to pay the interest rate on the vehicle loan.

It is important to note that the individual taxpayer should obtain interest payment certificate and keep the required documents such as tax invoices and loan documents accessible while filing returns.

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Specific conditions for claiming deduction amount

Here is a list of specific conditions that you should be aware of while claiming the deduction amount.

  • If you are taking a loan to buy an electric vehicle, then you should take it from a financial institution or a non-banking financial organization.
  • The loan should be sanctioned from April 2019 to March 2023.
  • It is worth noting here that you cannot get tax benefit on hybrid vehicles. In hybrid vehicles, the car is usually powered by a combination of fuel and battery.

To meet the climate regulations framed by world bodies, the government has taken initiatives to promote the use of electric vehicles. In addition, state governments are now providing attractive incentives to accelerate the adoption of electric vehicles among car buyers.

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The special thing is that the GST of electric vehicles has been drastically reduced. Most of the Indian states nowadays provide subsidy on electric vehicles. As an EV owner, you don’t even have to pay road charges. Let us hope that the above points will help you to get a proper understanding of tax deduction in case of EV.

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