People have now started getting serious about keeping the environment clean and neat. Go green is the strategy that most people are adopting in today’s times and even the automotive industry has been of great support in this with the launch of electric vehicles.
Since these vehicles emit no gasses and air pollutants, they are known to be the future of the automotive industry. Furthermore, the demand for EV vehicles has increased due to the rising fuel prices. However, electric vehicles in general are not only cost effective but also offer great tax benefits. Read on to know all about tax benefits on electric vehicles.
In the Union Budget 2019, the finance minister announced tax incentives on electric vehicles. A new section 80EEB introduced during the session allows for tax deduction on the interest paid towards the electric vehicle loan from 2020-21.
One of the primary objectives for introducing section 80 EEB has been towards ensuring a green environment by emitting pollutants, encouraging eco-friendly transportation, etc.
What does Electric vehicle mean?
Electric vehicle is a vehicle that uses a traction battery to supply traction energy and a vehicle that is equipped with an electric motor. The vehicles have an electric regenerative braking system that converts kinetic energy to electrical energy on application of the brakes.
Conditions on which deduction under section 80 EEB can be claimed
- The loan should be purchased only for financing the electric vehicle
- Tax benefits can be availed only on the interest of the EV loan
- The loan should be taken from a registered bank or non banking financial institution
- Deductions cannot be availed by Hindu Undivided Family, Association of Person, a company, partnership firm or any other type of taxpayer
- Deduction up to which tax benefit can be availed is Rs. 1. 5 lakh
- The sanction period of the loan should be FY 2022-21
Benefits of Electric Vehicle
While availing tax benefits is assured, you can also receive the below benefits:
1). GST Rate
On EV vehicles, the government has reduced the GST from 12% to 5%
2). Green Tax Benefits
EV vehicles are exempted from green that is charged at the time of renewal of registration certificate after every 15 years
3). Low Maintenance Cost
Compared to traditional petrol and diesel vehicles, EVs are low on maintenance cost
4). No Requirement of PUC Certificate
PUC, pollution under control certificate which signifies that the vehicle is not emitting hazardous gasses is not required for EVs. These vehicles are battery operated, requiring no certification.
5). Electric car insurance
Insurance companies offer coverage for EV with electric vehicle insurance that insures you against third party and own damages. Purchasing third party insurance for electric vehicles is mandatory as per the law.
To conclude, it can be said that electric vehicles are the future as with time people are adapting to using such vehicles. The prices of petrol and diesel are skyrocketing every passing day. With the government’s support to offer tax exemptions, electric vehicles are more affordable than earlier. Moreover, buying an electric vehicle insurance ensures added protection.