How to Save Tax on Electric Vehicles (EVs)?

Electric cars are known as the future of the automotive industry. The reason is that they do not emit greenhouse gases and air pollutants. Moreover, there are several benefits associated with it. If you are ready to buy an electric car, know ways to save tax on Electric Vehicles and make your purchase successful.

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Income Tax Exemption on EVs Under Section 80EEB

As per the Union Budget 2019, the central government announced tax incentives for purchasing electric vehicles, including electric cars. During the Union Budget announcement, the Finance Minister stated that all registered electric vehicle falls under this scheme.

Under Section 80EEB, the deduction on loan interest taken for purchasing EVs from the assessment year 2020-21 to 2022-23 is introduced.

The primary objective of introducing Section 80EEB is to control the emitting pollutants, encourage eco-friendly transportation, and save tax on electric cars.

Electric Vehicles Falling Under Section 80EEB

Under Section 80EEB, an electric vehicle must be equipped with an electric motor that uses a traction battery to supply traction energy. Moreover, these vehicles have an electric regenerative braking system that converts kinetic energy to electrical energy while applying brakes.

Conditions to Claim the Deduction on EVs Under Section 80EEB

• The loan should be taken only to buy Electric Vehicle (EV)
• The loan should be availed from a financial institution or NBFC (Non-Banking Financial Company)
• The tax benefits are given only on the loan interest
• Under the Section 80EEB, the deduction is only for individual taxpayers
• The deduction is not available for Hindu Undivided Family (HUF), Association of Person(AOP), a company, a partnership firm, or any other type of taxpayer
• The loan sanction period can be between Assessment Year 2020-21 till 2022-23
• The deduction claim amount shall not exceed Rs 1,50,000.

You May Also Read: Everything Know About Third Party Liability Cover

Benefits of Opting for Electric Vehicle

Here is a list of benefits of opting for EV as your daily companion-

1. GST Rate

   On Electric Vehicles (EVs), the GST rate is reduced from 12% to 5% by the government.

2. Tax Benefits

   Any individual taxpayer can receive a claim deduction Under Section 80EEB on the loan interest. Ensure that the loan facility is availed from any banking institution or NBFC. Also, it can be marked as an expense in the book of an account by the vehicle owner.

3. Green Tax Benefits

   All Electric Vehicles (EVs) are completely exempted from Green Tax. Under the Green Tax, vehicles are charged tax during the renewal of the registration certificate which is after every 15 years.

4. Low Maintenance Cost

   The maintenance cost of Electric Vehicles is very low as compared to traditional petrol or diesel vehicles.

5. Electric Car Insurance

   With electric car insurance, you get coverage for various unforeseen instances. Also, the damages are fixed quicker than usual. With an car insurance, you get assurance for any kind of loss or damage caused to the insured car.

   Moreover, as per the Motor Vehicle Act, it is mandatory to obtain at least third-party liability cover. However, it does cover accidental damages or damages to your own car.

6. PUC Certificate Not Required

   If you own any electric car, you do not need to carry a Pollution Under Control Certificate. Electric cars run on batteries and do not emit any harmful gases into the environment. Hence, there is no need for this certification.

Final Words

There are several advantages associated with an electric car. With time, the end of petrol & diesel and gasoline is near. The government subsidies like tax incentives are one of the initial that pushes the sales and adoption of Electric Vehicles (EVs).

If you are planning to buy an electric car, make sure you save tax on your next purchase. Along with it, obtain an electric car insurance policy and give your electric car extensive financial protection.