Tax Benefit on Electric Vehicle: The demand for electric vehicles is continuously increasing in India. These electric vehicles are being seen as an alternative to petrol and diesel. Besides this, there is no risk of increasing air pollution. Apart from this, they also save expenses on fuel. The government is also encouraging people by giving them the benefit of tax exemption on the purchase of electric vehicles. If you are also planning to buy an electric vehicle, then you should get information about claiming tax benefits. Come, let us know how to avail the benefit of tax exemption on electric vehicles.
How to get relief from tax
Owning a car has traditionally been considered a luxury item in India’s tax system. Therefore, there are limited tax incentives or benefits associated with car loans, but in view of the serious environmental crisis in the future, the government is now actively taking initiatives to encourage the purchase of electric vehicles. Under this, the government is offering tax benefits to those who buy electric vehicles. To facilitate this, a new rule has been added to the Income Tax Act, which provides tax benefits to individuals purchasing electric vehicles. Thus, a greener and more sustainable automotive future is being promoted in the country.
Tax exemption on purchase of electric vehicle
In the Union Budget 2019, the Government of India introduced tax exemption on the purchase of electric vehicles. For those interested in purchasing electric vehicles, the government has introduced Income Tax Section 80EEB, which is specifically designed to provide attractive tax incentives. Under Section 80EEB, electric vehicle owners can avail tax exemption of up to Rs 1.5 lakh on the interest paid on the loan amount. This will reduce the burden on the pockets of those purchasing electric vehicles.
Eligibility for Section 80EEB
Section 80EEB is beneficial only for individuals. A Hindu undivided family (HUF), partnership, business, association of persons (APO) or any other type of taxpayer is not eligible to avail the benefit of this tax deduction. You can avail the benefit of tax exemption on loan to buy an electric vehicle.
How to get the benefit of tax exemption on electric vehicles
If you are an individual taxpayer, you will need to obtain the tax challan, interest-payment certificate and loan documents. You have to compile them before filing your Income Tax Returns (ITR), which should also include income tax deductions to get tax exemption. EV loan must be approved and sanctioned after April 1, 2019 but before March 31, 2023. Additionally, it should be purchased from a registered financial institution or non-banking finance company for tax exemption.
What are the benefits of buying an electric car?
If you are going to buy electric vehicles for yourself or your family, then you should also know about its benefits. There are many such benefits which you do not get in vehicles with ICE engines.
No pollution certificate required
If you have an electric vehicle, you will not need to keep a pollution certificate, because your vehicle does not spew smoke. However, for vehicles running on petrol and diesel with ICE engines, it is necessary to have a pollution certificate and to get the vehicles checked from time to time to ensure they are pollution free.
benefit of tax exemption
Now if you have an electric vehicle, you will also get the benefit of tax exemption under Section 80EEB of Income Tax. With this, electric car, motorcycle or scooter will become cheaper for you. The purpose of providing the benefit of tax exemption by the government is to reduce the burden on your pocket. The reason for this is that due to import of spare parts used in electric vehicles from other countries, their prices increase compared to petrol-diesel vehicles, due to which people do not focus on purchasing them. But, after getting tax exemption, the prices of these vehicles reduce considerably.
GST burden reduced
The tax rate on electric vehicles is more favorable than conventional vehicles. Recently, the Central Government has reduced the Goods and Services Tax (GST) on EVs from 12 percent to just 5 percent.
get rid of green tax
When a car owner goes to re-register his car after 15 years, he has to pay green tax. But when you buy an electric vehicle, you get rid of green tax.
Reduce maintenance and fuel expenses
After purchasing an electric vehicle, you will not have to spend money on petrol and diesel to run it. You can charge it at home itself. Apart from this, the cost of their maintenance also reduces significantly.
Insurance
As per the Motor Vehicle Law, you must have electric vehicle insurance for your EV. If you decide to purchase comprehensive car insurance for your electric vehicle, it will save both your vehicle and your money from any unexpected disaster in the future. Additionally, it will also protect you from any harm caused to other parties.