Skyrocketing petrol and diesel prices have pushed customers to move to a more cost-effective option- Electric Vehicles. They are not only easier on the pockets and promote zero carbon emission but are also more efficient than traditional ICE models. Not only this. Owning an EV also allows you to enjoy EV tax benefits, making vehicle ownership more economical.
If you are considering switching to an electric car anytime soon, you will be happy to know that you can enjoy some tax benefits on the interest paid on loan borrowed to purchase an electric vehicle (EV).
In the union budget 2019, the Indian government had announced certain tax deductions under a new section 80EEB in the Income Tax Act (ITA). Why? Well, primarily to encourage more people to buy EVs and boost the adoption of electric vehicles in the country. This was done in a bid to reduce the carbon footprint caused by traditional fuel-based vehicles. Read on to learn more about the newly announced tax benefits on EVs.
Tax benefits on electric cars
If you purchase an EV on loan, you can avail of tax incentives under section 80EEB of the ITA, whether you use the vehicle for personal or business purposes.
You can claim an income tax deduction worth Rs. 1.5 lakhs on the interest component of your personal loan EMIs. The government is also planning to reduce the Goods and Services Tax (GST) on EVs from 12 to 5%.
However, the tax deductions for EVs will only be available for loans sanctioned between 1 April 2019 and 31 March 2023. Also, only individual taxpayers are eligible for the benefit. If you’re a company, partnership firm, HUF, or any other kind of taxpayer, you won’t be eligible for any tax benefits under section 80EEB.
Some other conditions of Section 80EEB include –
- You should only use the loan to purchase an electric vehicle.
- You can avail of the EV tax benefits for two-wheelers, three-wheelers, and four-wheelers.
- You must take the loan from a financial institution or a Non-Banking Financial Company (NBFC).
- You can only avail of the EV tax benefits under this section if you’re buying an EV for the first time.
In any case, it would be best to consult a financial expert to learn more about the tax deductions on electric vehicles.
Additional Read: Learn about tax benefits on loans in India
Should you buy an electric vehicle?
With a wide variety of electric cars launching in the market, EVs have become a viable option for Indian consumers. As you may know, EVs are powered exclusively by electric motors instead of gasoline or diesel and can help decrease the carbon footprint.
Although EVs are more expensive, they provide distinct advantages to the buyer and the environment. Luckily, you can afford one by taking a personal loan for electric cars, which is a simple and hassle-free process.
Furthermore, some two-wheeler manufacturing companies have also announced that they will be launching new EV models soon. They will be more cost-effective and convenient. Undeniably, the EV industry has a bright future in India. So, if you’ve been pondering whether to buy one, now will be a perfect time!
Considering buying an electric car? Turn to Tata Capital!
If you wish to switch to an electric vehicle but lack the funds, turn to Tata Capital! You can obtain a quick and easy personal loan for purchasing an electric car while enjoying quick disbursal, easy repayment options, and comfortable tenure. Also, we only require minimal documentation to process the loan.
Ready to apply? Check your personal loan eligibility on our website.