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Buying an electric vehicle can get you these benefits: Know it all here

Buying an electric vehicle can get you these benefits: Know it all here

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There are several government initiatives to promote electric vehicles in India through demand and manufacturing incentives. Electric vehicle consumers can avail several benefits. Here is a quick look.

Electric vehicles have been gaining a stronger foothold across India with more consumers showing interest in the zero-emission pure electric vehicles. While the momentum of growth in this segment is majorly driven by electric two-wheelers, especially low-speed scooters, electric three-wheelers too are pushing the segment hard. However, the electric passenger vehicle segment is yet to pick up momentum. Currently, the segment is led by Tata Motors with its Nexon EV and Tigor EV. Apart from that, Hyundai, MG Motors, Mercedes-Benz, BYD, BMW, Volvo, and Audi, too have their respective offerings in the segment. The electric four-wheeler category sells around 4,000 cars per month in India.

While there is intense debate about whether electric vehicles or so-called green vehicles are really clean and carbon neutral or not, they benefit the environment by not producing tailpipe emissions like petrol or diesel-powered vehicles. They are beneficial in many other ways for the consumers. Electric vehicles are significantly cost-effective in terms of operational cost and cost of ownership compared to their internal combustion engine (ICE) powered counterparts. Furthermore, sky-high petrol and diesel price along with the lack of availability for CNG or auto LPG have been fuelling the growth and popularity of electric vehicles.

Electric vehicles in India are not only cost-effective compared to their ICE counterparts but also have tax advantages in India. State governments such as Delhi, Gujarat, Maharashtra and Meghalaya have been focusing on demand incentives and offering benefits directly to the customers purchasing electric vehicles. Other states such as Karnataka, Tamil Nadu, Andhra Pradesh and Telangana have been focusing on manufacturer-based incentives. States like Goa, Jharkhand, Assam, and Bihar too have announced their respective electric vehicle policies to promote zero-emission green and clean mobility.

Government subsidy

The Indian government has been offering a demand incentive to the customers of high-speed electric vehicles. There are specific criteria for being eligible to receive the benefit of the incentive under the FAME scheme. Some state governments too have started offering subsidies to electric vehicle consumers. Combining the state and central governments’ incentives, it becomes well beneficial deal for the buyers.

GST benefit

Electric vehicles come with various benefits. One of them is the GST benefit. An electric vehicle purchase brings the consumer tax benefit on GST. Currently, the GST on electric vehicles is 5% as compared to the previous 12%, as announced by the central government.

Tax deductions on loans for electric vehicles

Under section 80EEB, a customer is eligible to get a total tax exemption of up to Rs 150,000 on payment of an EV loan. This tax exemption is available for both four-wheeler and two-wheeler electric vehicle purchases.

Section 80EEB conditions in a nutshell:  

  • This exemption can be availed by any electric vehicle customer but only one time for one vehicle purchase. This means only an individual who has never owned any electric vehicle before can avail of the tax relief on loan for purchasing an EV under Section 80EEB.
  • This exemption is only for people buying an electric vehicle on loan. The vehicle loan financing for the electric vehicle should be availed from government-registered financial institutions like banks or NBFCs.
  • The tax exemption is only meant for individual customers buying an electric vehicle, not for businesses. Hence, the tax relief can only be availed by individuals.
  • The tax relief under Section 80EEB can be availed for payoffs of all-electric vehicle loans taken during the period of 1st April 2019 and 31st March 2023.
  • Tax benefits under Section 80EEB are available for electric vehicle buyers from FY2020-2021 onwards.

Also Read: Electric vehicles face a moment of reckoning in India

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