We think that buying an electric vehicle will cost us more than buying an Internal combustion engine. But we need to look beyond the added benefits that electric vehicles provide you in contrast to ICE vehicles. What are they?
- No need to incur high petrol costs.
- Low maintenance
- Updated technology and added features to ICE vehicles.
- Higher lifetime
Today in this article we’ll be looking at different policies by the government of India along with the tax deduction incentive under section 80EEB.
EVs incentives by the Government of India
These incentives are provided under the FAME II scheme launched on April 1, 2019, with an allocation of 10,000 crores on this scheme.
The consumer receives a direct reduction in the price of the electric vehicle under the purchase incentives schemes. On two-wheeler EVs, you can receive an incentive of INR 15,000 per KWh with a cap of 40% of the vehicle’s cost. When it comes to FAME Scheme beneficiaries, Karnataka ranks first, followed by Tamil Nadu, Maharashtra, Rajasthan, and Delhi.
Financial incentives with a subsequent reimbursement of the cost. The coupon rate can vary for different vehicles and they come for an added period only. For example, the Haryana government gave a coupon on the purchase of EVs within the implementation of the policy for a period of six months. The coupon price ranged from Rs. 50,000-1 Lakh.
An inducements Discount on the interest rate is provided while obtaining a loan. The Delhi government provided an Interest Inducement of 5% on the purchase of electric vehicles.
Road tax exemption
There is no road tax due at the time of purchase. If you take a loan to buy the EV, you can get tax breaks worth up to INR 1.5 lakh. If you are a Delhi resident, you can reduce the amount up to 4-15%
No registration cost required
A one-time registration cost that applies whenever you purchase a new car is waived.
On de-registering outdated gasoline and diesel vehicles, you can get scrapping incentives. Multiple outlets help you exchange your old vehicle for a new electric vehicle.
You can also take advantage of benefits like interest-free loans, top-up subsidies, special incentives on electric three-wheelers, etc.
|Deduction amount||Type of vehicle|
Rs 15000/- per kWh upto 40% of the cost of Vehicles
Rs 10000/- per kWh
Rs 10000/- per kWh
Rs 20000/- per kWh
Electric vehicle deduction under the tax regime
Under Section 80EEB of the Income Tax Act of 1961, you can receive tax exemptions of up to INR 1.5 Lakh if you take a loan from the bank to buy a 4-wheeler or 2-wheeler electric vehicle. However, there is one condition for taking such a deduction, you should only buy the EV for personal only then you can avail the benefit.
How to apply for an Electric Vehicle Loan?
- Choose the EV of your choice at the EV dealership.
- Check the available interest rates, maximum loan amounts given, and loan periods provided by different banks.
- Once you have chosen a bank of your choice, read all the lender’s application procedures.
- Fill out the application, submit it along with the required proforma invoice for the vehicle, and hand over the documentation proving your identity and residence.
- Following approval, the lender will pay out the loan sum.
- The loan can be sanctioned till 31st March 2023.
Who is eligible under section 80EEB?
It is available both to an individual taxpayer and a business corporation that can file for such a deduction. The education would be counted as repayment of the loan.
What is the amount given under this scheme?
Section 80EEB allows for a deduction of up to interest payments of Rs 1,50,000 on interest paid on the loan amount plus the purchase of the EV. You need to keep the interest slip safe at the time of filing the return.
Now buying an EV will be more fun after reading about all these policies and tax incentives. Don’t stop electrifying your mobility.