Budget 2019: Buying An Electric Vehicle Will Cut Your Tax
Taxpayers will get benefit of additional deduction of up to Rs 1.5 lakh from taxable income for buying electric vehicles on loan.
Buying an electric vehicle can now get you a tax relief.
Finance Minister Nirmala Sitharaman, in her budget speech, proposed a new section in the Income Tax Act, allowing a deduction of interest of up to Rs 1.5 lakh on a loan taken to buy an electric vehicle between April 1, 2019 and March 31, 2023. The deduction will lower the taxable income and the tax outgo.
Certain parts are now exempted from customs duty, lowering costs. Sitharaman, in her maiden budget speech, also said the Goods and Services Tax Council would consider slashing the rate on battery-power cars from 12 percent to 5 percent. “Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles,” she said.
India targets to turn at least 30 percent of vehicles electric by 2030 as it aims to cut reliance on fossil fuels to cut import bill and curb pollution. The government has already announced second phase of a scheme to boost electric mobility with an outlay of Rs 10,000 crore starting April 1. Called the Faster Adoption and Manufacturing of Electric (and hybrid) Vehicles scheme, it offers upfront incentives on purchase of battery-powered cars and focuses on creating the necessary charging infrastructure.
“The government already moved the GST Council to lower rates on EVs from 12 percent to 5 percent and the additional income tax reduction is a major boost for end consumers to purchase EVs. It addresses the concern of the upfront cost of purchasing such cars,” said Tarun Mehta, chief executive officer and co-founder at Ather Energy Pvt. Ltd.—a maker of battery-powered scooters. “This is the best example of a consumer-driven change. It now becomes imperative that OEMs (original equipment manufacturers) chalk out plans that allows the industry to scale up and meet the demand for compelling products.”