Saving On Tax With Electric Vehicles – A Guide

Electric vehicles (EVs) are the future of transportation, providing a greener environment by reducing emissions and offering financial benefits for Indian consumers. In addition to saving on fuel costs, EV buyers can capitalize on income tax deductions, making the switch eco-friendly and economically savvy. **

Section 80EEB Deduction: A Green Initiative

Section 80EEB, introduced in the 2019 Union Budget, offers tax deductions on interest paid for electric vehicle loans, promoting eco-friendly transportation since the fiscal year 2020–21.

How To Avail Section 80EEB Deductions

Section 80EEB of the Income Tax Act allows individual taxpayers to claim up to ₹1.5 lakhs in deductions for the interest paid on electric vehicle loans, excluding corporations and businesses. **

Claiming 80EEB Deductions: Key Requirements

To benefit from the Section 80EEB deduction:

  • Only individual taxpayers qualify; corporations and businesses are ineligible.
  • The EV can be used for both personal and professional purposes.
  • The purchase must be made between April 1, 2019, and March 31, 2023, using a vehicle loan.
  • If the EV is used for business, any interest paid exceeding ₹1.5 lakhs in a financial year can be written off as a business expense.
  • To claim the benefit, register the vehicle in the individual’s name and secure loans from banks or financial institutions.

Tax Benefits Beyond Section 80EEB

In addition to income tax deductions, there are other financial advantages for EV owners:

GST Reduction: The government has reduced the Goods and Services Tax (GST) rate for EVs from 12% to 5%, making EVs more affordable. **

Green Tax Exemption: EVs are exempt from green tax upon registration renewal after 15 years.

No PUC Certificate Requirement: Unlike petrol or diesel vehicles, EVs are exempt from Pollution Under Control (PUC) certificates as they emit no harmful gases.

Low Maintenance: EVs require minimal maintenance compared to traditional vehicles.

Insurance Coverage: Many motor insurance companies offer third-party and personal damage for EVs.

Additional Financial Incentives For EV Owners

Governments at both the central and state levels are incentivizing EV adoption:

  • The Ministry of Road Transport and Highways (MoRTH) has waived registration and renewal fees for battery-operated vehicles.
  • State governments like Tamil Nadu offer a 100% motor vehicle tax exemption for EVs registered between January 1, 2023, and December 31, 2025.
  • The Delhi government exempts electric vehicles from road tax under the Delhi Electric Vehicle Policy.
  • Certain EVs are exempt from the ‘green tax’ imposed on older, polluting vehicles.

Choosing The Right Insurance For Your EV

Securing motor insurance for your EV is essential for financial protection. Insurance providers offer reliable motor insurance policies and are known for their straightforward claims process. From policy purchase to online renewals, electric vehicle insurance providers ensure a hassle-free experience. Claims are subject to terms and conditions set forth under the motor insurance policy. *

As electric vehicles gain traction in India, the associated tax benefits and financial incentives are compelling for consumers to switch. Beyond contributing to environmental preservation, EV owners can maximize savings and contribute to a cleaner, greener future. Consulting with a financial advisor or tax specialist is recommended to understand the tax advantages fully. When purchasing an EV, remember to secure car insurance online for comprehensive coverage. Claims are subject to terms and conditions set forth under the motor insurance policy. ## ** *

* Standard T&C Apply

** Tax benefits are subject to change in prevalent tax laws.

## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

Latest articles

Related articles