Electric car tax incentives for Indian buyers: When it comes to promoting electric vehicles, the Government of India is putting its best foot forward. With the focus on cleaner transportation, the Indian government is offering tax incentives to encourage people to choose an eco-friendly option when buying cars.
These incentives not only reduce the initial cost of buying an electric car but also offer financial benefits in the long run. Let’s explore the electric car tax incentives for Indian buyers provided by the central and state governments.
Central Government Incentives
Reduced Goods and Services Tax (GST): The lower GST rate is one of the biggest benefits of buying an electric car. The electric vehicles enjoy a significantly lower GST of only 5% as compared to the petrol or diesel vehicles. It means direct savings on the purchase price of the car. It is important to note that GST on petrol and diesel cars can vary from 0% to 28% depending on the car type and usage.
FAME-II Scheme: The Department of Heavy Industries had introduced the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme, which offers additional incentives on purchase of electric cars in the form of direct subsidies. However, the subsidy amount may vary depending on the vehicle category and battery capacity.
It is important to note that subsidies under the FAME-II Scheme will be eligible for electric vehicles sold till March 31, 2024, the Ministry of Heavy Industries had announced recently.
Income Tax Deduction under Section 80EEB: Under this section, If you borrow a loan for the purchase of an electric car, you can get a deduction of up to Rs 1.5 lakh on the interest paid during the loan tenure. However, it is important to note that loan sanctions are applicable for the period between April 1, 2019 and March 31, 2023.
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State-level incentives
Offering additional benefits, several states in India have introduced their own EV policies. These include:
Road tax waiver: Some states in India offer complete or partial road tax exemptions to buyers on electric cars.
Registration fee exemption: Some states offer reduced registration fees for electric cars, which further lowers the on-road cost of the vehicle.
Other benefits: Some states offer additional perks to electric car buyers such as preferential access to carpool lanes, free or discounted parking and even special subsidies for setting up EV charging infrastructure.
Beyond the numbers:
The tax benefits are undoubtedly significant, but one must also consider other advantages when buying an electric car. EVs are significantly cheaper to run and maintain as compared to petrol or diesel vehicles, thanks to lower electricity prices compared to fuel costs. Additionally, EVs contribute to a cleaner environment by producing zero tailpipe emissions.
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