The budget 2024 introduces various tax incentives, deductions and benefits for electric car buyers, considering the huge demand for tax deductions on electric vehicles and the push for a greener future.
This article provides an overview of the tax benefits available for electric vehicles, along with their impact on the auto industry and the environment.
Tax Incentives for Electric Cars
Income Tax Deduction: Section 80EEB of the Income Tax Act allows buyers of electric vehicles to claim tax savings of up to Rs. 1,50,000 on the interest paid on a loan obtained specifically for the purchase of the vehicle. However, certain conditions must be satisfied, and the loan must be granted between January 1, 2019 and March 31, 2023, to qualify for the Section 80EEB deduction.
Goods and Services Tax (GST) Reduction: The Goods and Services Tax ( GST ) on electric cars has been reduced to 5%. This reduction is expected to result in direct savings on the purchase price of electric cars compared to petrol or diesel vehicles.
Road Tax and Registration Fee Exemptions: Several states in India have implemented exemptions on road tax and registration fees for electric vehicles, offering significant cost savings for buyers.
Additional Benefits
Subsidies and Incentives: In addition to the tax deductions, the Department of Heavy Industries has introduced various subsidies and incentives under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles ( FAME ) II scheme. These include direct subsidies for the purchase of electric cars and support for the expansion of charging infrastructure.
Depreciation Rate of 40%: The government allows a depreciation rate of 40% on electric cars, in contrast to the standard rate of 15% for petrol and diesel vehicles.
Impact on the Auto Industry
The introduction of tax benefits and incentives will play a vital role in propelling the growth of the electric vehicle industry. Lowering the cost of ownership and maintenance can encourage more people to consider electric cars.
Promoting electric mobility has numerous benefits, such as reducing carbon emissions and combating air pollution. Furthermore, electric vehicles produce zero tailpipe emissions, which can significantly lower the levels of harmful pollutants in urban areas.
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