Union Budget 2019: Save Up To Rs 1.5 Lakh On Income Tax Through A Loan On Any Electric Vehicle

Union Budget 2019 is being announced and Finance Minister Nirmala Sitharaman has made it clear that the centre will be empowering the adoption of electric vehicles in India in every way possible. For this, the new union budget now offers a deduction in income tax on the interest on loans taken to buy an electric vehicle. In addition, the tax on such electric vehicles has now been reduced to 5% from the previous 12%.

This means that under the new budget, anyone planning to buy an electric vehicle will get considerable incentives on all the fronts. First, income tax deduction of up to Rs 1.5 lakh will be offered on the interest on loans for electric vehicles. This means that anyone planning to buy an electric vehicle and who takes a loan for the same will be getting a tax deduction on their income, based on the interest on the loan amount, to a total of Rs 1.5 lakh.

(Representative Image: BCCL)

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Second, the union government has also reduced the tax on electric vehicles from 12% to 5%, in a bid to bring their overall prices down and make them more affordable to the buyers. The move had been proposed earlier by the Ministry of Road, Transport and Highway led by Union Minister Nitin Gadkari for all the categories of electric vehicles.

Finance Minister Nirmala Sitharaman also highlighted the government¡¯s efforts towards bringing a complete EV ecosystem in India. For the same, the government had earlier approved Rs 10,000 crore under its FAME II scheme on April 1, 2019. The scheme is aimed at faster adoption of electric vehicles in the country by providing subsidies to both the makers and the buyers, as well as setting up a network of the corresponding infrastructure throughout the country. For the charging network, the Finance Minister mentioned that there will be a restructuring of National Highways Programme for the creation of National Highways Grid of desirable capacity.

The industry has also reacted to the move, with various players involved in the EV ecosystem hailing the steps taken towards increasing their use. Bhavish Aggarwal, Co-founder & CEO of Ola said, ¡°The Government¡¯s focus on Electric Mobility and EVs in the Budget 2019 is inspiring. Lower GST rate, interest subvention for EV loans and the commitment of Rs. 10,000 cr towards FAME 2 are encouraging." Chetan Maini, Co-Founder and Vice-Chairman, SUN Mobility highlighted the missing initiative around EV batteries which could have helped further, saying ¡°The decision to reduce GST on EVs from 12% to 5% is a reassuring move by the Government and furthers the country¡¯s commitment to transition to an EV future. As an EV energy infrastructure provider, we welcome the move; however it would be more beneficial for the end-user, if the Government also focus on reducing GST on charging / battery swapping services from 18% to 5% (same as that for public transport services).¡±