Tax Benefits of Buying an Electric Vehicle: How EVs Can Help You Save on Income Tax

There's no denying opting for electric cars is a choice we may all have to make. But many of us may be put off by the hefty price tags that accompany electric cars. However, we must consider the many advantages electric cars actually offer. Read on to find more details about the tax benefits of buying an electric vehicle and why it is important to purchase electric car insurance.

How can EVs help save tax?

Owning a car is considered a luxury in the Indian tax system and there are no tax benefits for car loans. However, given the unchecked global pollution problem, the Indian government is taking steps to increase the adoption of electric vehicles. Therefore, the government has created a new section in the Income Tax code that provides tax benefits for electric car owners.

EV Tax Exemption Section

According to the Union Budget 2019, the Government of India is offering a tax exemption for the purchase of electric vehicles, applicable to both four and two-wheeler electric vehicles. The government has introduced Income Tax Section 80EEB to provide tax incentives to electric car buyers. Under Section 80EEB, electric vehicle buyers are entitled to tax exemption up to Rs 1.5 lakh on the loan amount.

Electric car insurance

Bajaj Allianz Electric Car General Insurance protects your electric car against potential economic losses in case of an accident or other eventualities. Electric vehicle owners are financially protected from potential financial risks by purchasing electric vehicle insurance when needed. Additionally, 11 roadside assistance services are included in your vehicle policy, including a dedicated EV helpline, on-site charging, SOS, and low-energy towing.

Eligibility Criteria for Section 80EEB

Below are the criteria under section 80EEB for availing tax incentives for the purchase of electric vehicles.

• Only individuals can use this benefit in this section without complications. Therefore, if you are a HUF, AOP, partnership, company, or any other type of taxpayer, you are not eligible to avail this tax deduction.
• Please note that tax benefits are only available once per person when purchasing an electric vehicle for the first time.
• Tax exemption in this section is only available if you have a car loan to buy your electric car.
• This section was introduced in FY 2020-21, so now is the ideal time to go ahead and take advantage of it.

Availing Tax Benefit on EVs

If you are an individual taxpayer, you need to get the interest paid certificate, tax invoices, and loan documents and prepare all of them before filing your Income Tax Return (ITR) to get tax exemption.

Conditions for tax exemption

To avail the tax exemption, the EV loan must be obtained from a licensed financial institution or non-banking finance company and the loan should have been approved and sanctioned after April 1, 2019.

Why buy electric vehicle insurance?

Electric vehicles are becoming more common on Indian roads, and with this shift comes the need for specialized insurance policies to protect these vehicles and their owners. Electric car insurance in India provides several benefits that can safeguard both the owner and the vehicle. Firstly, electric cars require specialized components and technology, making them more expensive to repair and replace. This means that electric car insurance premiums can be higher. Having electric car insurance can provide peace of mind in case of damage or accidents, ensuring that the owner does not incur a significant repair bill. Moreover, electric bike insurance policies typically offer coverage for the unique features of these vehicles, including battery damage, fire, and explosion, which are not usually covered under traditional car insurance policies. Additionally, charging equipment coverage is also available under electric car insurance policies. Lastly, some insurance providers offer concessions and additional benefits for electric car owners, including discounts for installing charging stations at home and coverage for battery replacement costs. In summary, electric bike insurance and electric car insurance in India offers specialized coverage that considers the unique risks and features of these vehicles, providing owners with protection and peace of mind.

Conclusion

In conclusion, buying an electric vehicle not only helps reduce air pollution and promote sustainable living, but also offers various tax benefits that can help you save on income tax. The government's initiatives and incentives towards promoting electric vehicles in India have made EVs an attractive option for many car buyers. By taking advantage of these tax benefits, you can not only contribute to a cleaner environment but also save money in the process. It is recommended to consult with a tax expert or financial advisor to fully understand the tax benefits and how to claim them while purchasing an electric vehicle. Electric commercial vehicle insurance companies in India should also consider offering specialized insurance policies for electric vehicles to encourage their adoption. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.