We have to admit that a huge number of people prefer electric vehicles over traditional gasoline vehicles. These cars are also considered as eco-friendly cars. These vehicles are not only earthier options for our nature, and they are also the best alternative to gasoline vehicles. Also, the pricing of petrol and diesel is increasing in a daily manner, which is a serious matter of concern for us. Talking about the price hike of gasoline, this environment-friendly vehicle is the ultimate option this time.
Apart from their delightful impact on nature, having eco-friendly vehicles also comes with so many advantages including tax-benefits. In Indian tax law, owning a personal car is considered a luxury, which is why salaried employees do not get any tax benefits on automobile loans.
With the aim to intensify the usage of EVs in our country, our government has taken some initiatives. In The 2019 union budget of India, our government has declared incentives on buying EVs. Our finance minister has also specified that e-registered and advanced battery vehicles will be incentified to come under the same scheme as well.
Recently, a new section in Income Tax rules has been introduced called section 80 EEB. In which it is stated that, individual EV owners are now eligible for a tax reduction up to 1.5 lacs on the interest implicated on the mortgage balance under this outline. Fortunately, this scheme is applicable for both cars and two-wheelers. However, section 80 EEB does include some terms and conditions as well.
As of the increasing popularity of EVs, several major company’s manufacturers are producing some of the best EVs in our country. For which, you can decide what will be the best suitable deal in your budget. However, the complete tax benefits of buying an EV are discussed below for you.
Must know features of section 80 EEB
- The Eligibility Criteria: The deduction advantage can only be applicable on the individuals. This deduction advantage will not be applicable on any other taxpayers. Accordingly, if you are HUF, AOP, a company, a partnership firm, or any other sort of taxpayer, then you cannot apply for any of the benefits that come under this section.
- The whole deduction amount: In this section 80 EEB, the availability of the deduction for interest payment is up to 1,50,000 INR. This tax deduction will hugely help the car owner to pay the interest rate on the EV plant. However, do note that, any individual taxpayer should gather the income paid certificate and also should keep the necessary documents such as tax invoices and loan documents obtainable during the time of filling the return.
Conditions for claiming the Deduction Advantage:
- One of the most important conditions is that this advantage is available only once to individuals. In simple words, this advantage plan is only available for those who had never bought an EV before.
- Do keep in mind that when you are planning to buy an EV, you have to take it from a financial institution or from a non-banking financial company.
- The payoffs of EV loans will be sanctioned anytime between April 1, 2019, till March 13, 2023.
- Also note that the tax benefit will not be applied on hybrid vehicles.
- The tax benefits under section 80 EEB are available from FY 2020-2021 onwards.
- Not only you will get benefits of income tax, you might also get tax benefits on GST, as the government had cut the rate to 5% from 12%.
All Tax Benefits that you can get buying an EV
We have already discovered that you will get up to 1,50,000 of tax deduction, however, there are more benefits waiting for you.
- Less GST: Low GST rate is an amazing benefit you will ever get. Our Indian government has already reduced the GST rate on all EVs from 12% to 5%, and gasoline run vehicles have the GST of 28%. The government also charges 28% of GST on lead-acid batteries, and lithium-ion batteries have 18% GST.
- Reduced Road Tax: Most states have offered a road tax waiver on EVs, including Delhi, Maharashtra, Andhra Pradesh, Rajasthan, Punjab, Bihar, Uttarakhand, Goa, Tamil Nadu, and Karnataka. However, some states are not offering 100% road tax waiver, but they do reduce the road tax on EVs, such as Madhyapradesh is offering 4%, and Kerala is offering 5%.
- Spared from Green Tax: To reduce the pollution in our country, the government has declared a Green Tax policy in the budget 2019. It is stated in this policy that every personal vehicle will be charged tax at the renewal of registration certificate (after 15 years). Besides, the EVs are completely free from the Green T. In short only this tax will only be applied on the polluting vehicles.
- Concessional Interest Rates on buying EVs: Not only the governments are giving offers on the interest rates, several banks are also offering concessional interest rates on EVs, with 20 Bps interest rates deduction. SBI is giving concessional car loans on EVs with 2% lower rates than petrol or diesel cars.
- Fame Benefits on EVs: The government has also launched the Fame India Scheme, in which a subsidy will be given on the buying of a new EV. Under the second phase of this scheme the government has also established 350 EV charging stations as well.
5 Benefits of picking an EV:
- EVs are Low Maintenance: Petrol or diesel cars have too many moving parts, and those engines need high maintenance. Electric vehicles do not need high maintenance, as they do not have more than 20 parts. Therefore, choosing an EV will save your money in the long run.
- Good for our Nature: EVs are very safe for our environment. During this pandemic, our nature has been healed, and now we must keep nature in a healthy position. As an Ev do not have any toxic emission, and you can also reduce the carbon footprint, EVs are the best suitable option you can go for.
- Saves your Money: The prices of petrol and diesel are increasing at the speed of light. And this can be a serious matter for those who have fuel fed vehicles. Which is why selecting an EV is the best option, as they do not require any fuel.
- Easy Charging system: Are you fed up with the crowd at the fuel station? Then selecting an EV will be great. With EV you will just need to plug in your car for 4 to 5 hours, and then you are ready to go, forget about being late.
- Driving is fun with an EV: With EVs you do not need to worry about handing the gears, because electric scooters, cars and buses do not have gears. Evs are provided with the controlling panels. Therefore, if you are a beginner in driving, you can blindly go for an EV.
As described above, going for an EV will save a lot of your money. Besides, the government is also giving the advantage of tax reduction up to Rs. 1.5 Lakhs. Also, Evs are quite inexpensive, any middle class family can invest in buying them. There are several companies producing varieties of EVs, so you will get quite a good range of EVs to choose from.
