The Electric Vehicle (EV) industry in India is experiencing a significant affordability wave, driven by a range of tax benefits and incentives provided by the government. One of the key tax benefits for individuals looking to purchase an electric vehicle is Section 80EEB, which allows for a deduction of interest payments up to Rs 1,50,000 for loans sanctioned between January 1, 2019, and March 31, 2023. This deduction can provide a considerable financial relief to potential EV buyers, making the prospect of owning an electric vehicle more feasible.
To qualify for the tax deduction, the loan must be obtained from a financial institution or a non-banking financial company, and the electric vehicle must be exclusively powered by an electric motor with traction energy supplied by a traction battery. These criteria aim to encourage the adoption of pure electric vehicles, as opposed to hybrid models. Additionally, for individuals using EVs for business purposes, any interest payments above Rs 1,50,000 can be claimed as a business expense, offering further financial incentives.
The government has introduced several other tax benefits to bolster the EV ecosystem, including a reduction in the Goods and Services Tax (GST) rate for EVs from 12 per cent to 5 per cent. This substantial reduction in the GST rate makes electric vehicles more accessible to consumers. Furthermore, EV owners are exempt from green tax when renewing their registration certificates after 15 years, providing additional financial relief.
In addition to the central government’s initiatives, various state governments are actively participating in the promotion of electric vehicles by offering their own incentives. Tamil Nadu has announced a 100 per cent exemption of motor vehicle tax on EVs registered in the state for a specific period, while the Delhi government has waived road tax for electric vehicles under its Electric Vehicle Policy.
The current trends and policy measures indicate a significant push towards the adoption of electric vehicles in India, driven by various financial incentives and tax benefits. As the EV industry continues to grow, it is expected to play a pivotal role in reducing vehicular emissions and promoting sustainable transportation in the country.
Opinion on the topic may include viewpoints from industry experts, environmentalists, and government officials, discussing the effectiveness of the current tax benefits and incentives in promoting the adoption of electric vehicles and their long-term impact on reducing carbon emissions and mitigating the environmental impact of traditional petrol and diesel vehicles.