How Does the Electric Car Tax Credit Work in India?
Are you planning to buy an electric car in 2021? We guess the answer is yes and it is due to the increasing price of petrol.
Petrol and diesel prices in the country have reached historical records. In the capital Delhi, petrol prices rose to Rs 101.84 per litre, while diesel prices rose to Rs 89.87 per litre as of today. In cities like Mumbai, petrol prices break all the records with Rs 107.83 per litre as of today. The facts are that rising fuel prices are a nightmare for anyone looking to buy a car. But it is also a reflection of the potential of the electric vehicle market. Tesla is also trying to enter the national electric vehicle market due to its expanding opportunities. Electric cars not only reduce fuel costs but also offer tax benefits. This is an article in the Income Tax Act where taxpayers who buy electric vehicles, such as electric vehicles, can claim tax relief.
What are these regulations?
The interest paid on the purchase of an electric vehicle (EV) with a loan can relate to a tax credit of up to Rs 1.5 lakh. It was announced in the 2019 budget. From April 1, 2020, it was claimed that for electric car loans, new tax cuts or interest cuts will be applicable under Article 80EEB of the Income Tax Act.
However, because of this advantage, there are also conditions. The first condition is that the electric vehicle loan was obtained between April 1, 2019, and March 31, 2023. In addition, there is a condition that you can avail of the tax benefits only on the purchase of the first electric vehicle and loan on its purchase. Make you don't own any other Electric vehicle. The tax exemption of Article 80EEB only applies to individuals and not to other taxpayers. In other words, Non-Divided Families (HUFs), AOPs (Person's Associations), Partnerships or private limited firms, Corporations, or other taxpayers in India cannot avail benefits for this opportunity. However, individual taxpayers can purchase electric vehicles for personal or commercial use.
Other benefits of having an EV
The government has taken several steps nowadays to promote EV among the country's people. In such a step, it reduced the price of electric vehicles from 12% to 5%. In addition, in some states, such as Delhi and Tamil Nadu, electric vehicles are exempt from tolls and registration fees and will be introduced in other states soon. This greatly increases the sales and decreases the cost of the vehicle. In the 2021 budget, the government announced a green fiscal policy to reduce pollution in the country. According to the Green policy, charged tax is applicable on passenger cars if the registration certificate is renewed after 15 years. Electric vehicles are completely exempt from green taxes. Tolls and taxes will be levied on polluting vehicles only.
Gasoline and diesel vehicles require expensive engines for life, whereas, on the other side, electric vehicles do not require any lifetime engine as electric motors have fewer than 20 moving parts as compared to conventional vehicles. This means that long-term maintenance costs for electric vehicles can be lower than for other petrol cars, bikes, and trucks.
Who are we?
At Kazam, you can find every possible assistance about Electric vehicles and their charging stations in India. We also take care of our EV buyers and give them customized EV solutions as per their needs. From battery and charging solutions to the range and cost of electric vehicles, this is the one-stop-shop for every EV requirement. For more information, please visit Kazam EV at , or write to us your concerns on our social media handles Kazam EV, and we will try to respond to your queries at the earliest. Book an appointment today!