Tax benefits on Electric Vehicles in India

EVs, or Electric Vehicles, are not only useful for the environment; they are also more effective than traditional fuel-based cars. Moreover, the steady rise in the prices of fossil fuels has allowed the car buyers to look for alternative vehicles.

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

Note that EVs also come with tax advantages in India. Presently, in India, there is no shortage of electric vehicles. Moreover, with increased sales, manufacturers are introducing newer types of models in the market. But do you know that EV owners can avail of exciting tax benefits from the industry? Let's find out!

Overview of Tax Deductions on Loan for EVs

As per Section 80EEB, buyers would get a total exemption on taxes of up to 150000 INR when paying off an EV loan. Note that this tax deduction is applicable for both the two-wheelers and four-wheelers. Let's take a glance at the features of Section 80EEB.

Eligibility

Note that this tax deduction is available only to individuals. In other words, this deduction does not apply to any other taxpayer. For instance, if you are a partnership firm, company, or any other type of taxpayer, you wouldn't be able to avail the benefits.

The Total Deduction Amount

Under Section 80EEB, a deduction of interest payments up to 150000 INR is available. This deduction would 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 the interest paid certificate and keep necessary documents such as tax invoices and loan documents accessible while filing the return.

Specific Conditions for claiming the Deduction Amount

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

• If you are taking a loan to buy an electric vehicle, 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 mentioning here that you cannot get tax benefits on hybrid vehicles. In hybrid vehicles, the car is usually powered by a combination of fuel and the battery.

To meet the climate regulations framed by world bodies, the government has taken initiatives to promote the use of electric vehicles. Moreover, state governments are nowadays providing attractive incentives to speed up the adoption of EVs among car buyers.

What's more, there has been a drastic reduction in GST of EVs. A majority of Indian states nowadays offer subsidies on EVs. As an EV owner, you also don't have to pay road fees. Let's hope that the above points will help you to get a proper understanding of the tax deductions in the case of EV's.