Budget 2019: Tax relief on auto loan! EVs to fetch Rs 1.5 lakh income tax exemption

Union Budget 2019: Finance Minister Nirmala Sitharaman in her maiden Budget 2019 speech on Friday announced additional income tax exemption of Rs 1.5 lakh for people buying electric cars on loan. This amounts to a total benefit of around Rs 2.5 lakh to the taxpayers over the period of purchase.

She also said the Goods and Services Tax (GST) on electric vehicles would soon be reduced from 12 per cent to 5 per cent. Both these decisions is likely to give a boost to green mobility in India.

"In order to incentivise the purchase of the electric vehicle by an individual, it is proposed to provide a deduction of an amount up to Rs 1,50,000 for interest paid on loan taken for the purchase of the electric vehicle. The loan is required to be taken on or before 31st March, 2023," said the Finance Minister.

To make India a global manufacturing hub for electric vehicles, Sitharaman said the government had taken several initiatives. The government has already asked the GST Council to lower the tax rate on electric vehicles from 12 per cent to 5 per cent, she said, adding that customs duty was also being exempted on certain parts of electric vehicles.

The Modi government in April had launched the second part of the FAME (Faster Adoption and Manufacturing of Hybrid and Electric vehicles) Scheme, under which the Centre would spend over Rs 10,000 crore to boost the EV adoption in India in the next three years. This will be done by offering an upfront incentive on the purchase of electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles.

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