Electric vehicle sales are raising up in the India as new products coming in with more practical range claims, customers are adopting electric vehicles over their ICE counterparts. Also pandemic boost the demand for individual mobility solutions, and the increasing cost of petrol and diesel is making buyers shift to cheaper fuel options.
As EVs are cheaper to own and run, the initial cost is high.
Government initiatives are helpful in reducing the initial cost of electric vehicles with FAME-II subsidies.
As there are high tax benefits, which can also be availe on purchasing an electric vehicle.
GST on EV
While, purchasing an electric vehicle can help you save on income tax under 80EEB if an electric vehicle is purchase against an auto loan.
As, GST levied on an electric vehicle is much lower than on an ICE vehicle.
Only 5% of the vehicle’s cost will be charge as GST against the purchase.
What is Tax Benefits 80EEB?
If electric vehicle is bought via an auto loan, then buyers are eligible for deductions of up to Rs 1.5 lakh annually, against the interest paid for the loan in the financial year.
As, this rule is applicable for both 2-wheelers and 4-wheelers.
Nothing of this sort is applicable to purchasing a conventional ICE vehicle, so making the whole EV purchasing experience further lucrative a deal.
Tax benefits under this section can be availe only if the amount was loan by register banks or NBFC.
So, it can be claim against the payoff made between April 2019 and March 2023.
Government is only offering this tax relief to individual buyers and not to businesses.
Many states are extending benefits under their EV policies to consumers and producers, and the list includes the likes of Delhi, Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Meghalaya, and Telangana.
The model for promoting EV adoption in states like Delhi, Gujarat, and Maharastra is more focus on providing upfront discounts and rebates to consumers.
Karnataka, Andhra Pradesh, Telangana and many more are promoting component and product manufacturing.
