Electric Vehicle Policy 2022 to Save Tax

There is good news for electric vehicle buyers because, now the benefit of income tax exemption can also be availed on the purchase of electric car.

Electric vehicles may soon overtake gas-powered cars. This has made it easy to imagine a future where electric cars will be everywhere. There’s a good reason for this change.

Electric cars are better for the environment and save consumers money in the long run. In a recent report, it was revealed that those who drive electric cars can save up to $ 1,000 (about 75 thousand rupees) per year.

The Electric Vehicles (EV) Policy, 2022 has been notified by the Government of India. The policy emphasizes the replacement of private four wheelers by electric vehicles with two wheelers, public transport and common vehicles and goods carriers.

To encourage the use of electric vehicles in India, the government created a new section that exempts electric vehicle owners from paying tax.

Electric vehicles (EVs) are not only better for the environment, they are also more efficient than conventional gasoline-powered vehicles. Apart from this, the increase in the prices of petrol and other fuels has attracted the attention of many customers towards electric vehicles.

In addition to subsidy, income tax exemption is also being given to promote electric mobility.

Various state governments are giving huge discounts on the purchase of electric vehicles. Registration and insurance of electric vehicles is free in many states of the country. At the same time, now you can also take exemption in income tax on buying an electric car.

EVs are not only economical but also have tax benefits in India.

Cars for personal use are considered a luxury product under Indian tax laws, so salaried professionals do not get any tax benefits on auto loans.

To encourage the use of electric vehicles in India, the government created a new section that exempts electric vehicle owners from paying tax.

There is no dearth of electric vehicle models in India and with increasing sales, different manufacturers are planning to introduce new models in the coming year.


Tax exemption on loan for electric vehicle in india

Electric car not only reduces the cost of expensive fuel, but also provides tax benefits. There is a section in the Income Tax Act of the country from which taxpayers who buy an electric vehicle like an electric car can claim tax deduction.

A total tax exemption of up to Rs 1,50,000 is available under section 80EEB while paying off the EV loan. This tax break is applicable for both four wheeler and two wheeler electric vehicle purchases.

Those who choose to buy an EV on loan will be eligible for a tax deduction of Rs 1.5 lakh on the interest paid on the loan amount under section 80EEB. For salaried professionals, this tax saving makes buying an EV as their next vehicle an attractive prospect.


Who can take advantage of Tax Exemption for Electrical Vehicle?

Only individuals can avail this deduction. No other taxpayer is eligible for this deduction. You cannot claim any benefit under this provision, if you are a HUF, AOP, Partnership firm, Company or any other type of taxpayer.

Conditions applicable to section 80EEB

  1. This discount is available only once for each individual. This means that only a person who has never owned an electric vehicle before is eligible for section 80EEB loan tax deduction.
  2. This discount is limited to those who are financing electric vehicles. The EV loan should be financed from a financial institution or a Non-Banking Finance Company (NBFC).
  3. Repayment of any EV loan accepted between 1st April 2019 and 31st March 2023 are eligible for tax saving under Section.
  4. Tax incentive is available under section 80EEB from FY 2021-2022.

Only new customers for EV purchase are eligible for tax deduction during the loan from section 80EEB.

The benefit of this exemption is available on the interest of the installments paid. In such a situation, if you are financing an electric vehicle, then only you will benefit from it. Keep in mind that the EV loan should be from a financial institution or a Non-Banking Finance Company (NBFC). As per the tax rules, EV loan should be sanctioned between April 1, 2019 to March 31, 2023 for tax exemption.

EV TAX SAVING

tax exemption on purchase of electric vehicle in india
Tax Exemption on Purchase of Electric Vehicle in India

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