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How Can Electric Vehicles Help To Save Taxes?
Sep 5, 2023

How Can Electric Vehicles Help To Save Taxes?

Electric vehicles (EVs) are becoming more popular in India. Not only are they environmentally friendly, but they can also help you save money in various ways, including taxes. In this article, we'll discuss the benefits of owning an electric vehicle, government policies on electric vehicles in India, challenges for electric vehicles in India, and how electric vehicle insurance can help you save money.

Benefits of Owning an Electric Vehicle

Owning an electric vehicle comes with several benefits that go beyond the environmental advantages:

·         Lower maintenance costs

Electric vehicles have fewer moving parts, and their batteries require less maintenance than a conventional engine. This translates into lower maintenance costs and can help you save money in the long run.

·         Zero emissions

Electric vehicles emit zero pollutants, making them better for the environment and your health. They can help reduce air pollution in cities, which is a growing concern in India.

·         Tax benefits

Electric vehicles have certain tax benefits in India, making them an attractive option for many people. EVs have only a 5% mandate from the Goods and Services Tax (GST) in India, which makes them more affordable than traditional vehicles. **

·         Financial incentives

Electric vehicles are eligible for financial incentives under the government's FAME II scheme, which provides subsidies to EV buyers and supports the development of charging infrastructure across the country. Overall, owning an electric vehicle can help you save money on maintenance costs, reduce your carbon footprint, and provide financial incentives. With the Indian government introducing policies and incentives to promote EV adoption, the future looks bright for the electric vehicle industry in the country.

Government Policies on Electric Vehicles in India

The Indian government has taken several steps to promote electric vehicles in the country. In 2013, the National Electric Mobility Mission Plan (NEMMP) was launched to promote the adoption of EVs and to address the challenges faced by the industry. Under this plan, the government has set a target of having six to seven million electric vehicles on Indian roads by 2020. To achieve this target, there are several government policies on electric vehicles in India that have been rolled out. These include:

·         FAME II scheme

This scheme provides financial incentives to EV buyers and also supports the development of charging infrastructure across the country.

·         Income Tax Deduction

If an EV owner has taken a loan to buy the vehicle, they are eligible for an Income tax deduction due to the interest payment they make on the loan. You can claim a tax deduction of up to ₹1.5 lakhs in a financial year. **

·         Lower road tax

Several states in India have reduced the road tax on electric vehicles, making them a more attractive option for buyers.

·         Subsidies for charging infrastructure

The government provides subsidies for the installation of charging infrastructure for EVs in public places and residential areas.

Challenges for Electric Vehicles in India

Despite the incentives and policies introduced by the Indian government, there are still several challenges facing the electric vehicle industry in the country. One of the biggest challenges is the lack of charging infrastructure. The availability of charging stations is essential for the adoption of EVs, and India has a long way to go in this regard. Another challenge for electric vehicles in India is their high upfront cost. While EVs are cheaper to maintain in the long run, their high initial cost can be a deterrent for many buyers. Additionally, there is still a lack of awareness and understanding of EVs among the general public, which needs to be addressed.

Electric Vehicle Insurance^

While owning an electric vehicle comes with several benefits, it's important to protect your investment with the right insurance coverage. An electric vehicle policy in India is similar to traditional car insurance policy, but there are a few key differences to keep in mind: For example, the batteries in electric vehicles are expensive to repair or replace. So, it's important to have insurance coverage for the battery by way of coverage for loss or damage for batteries after accounting for the accurate depreciation rate.* ^Claims are subject to terms and conditions set forth under car insurance policy. When choosing an electric vehicle insurance policy, it's important to compare policies from different insurance providers to find the best coverage and rates for your needs. Make sure to read the fine print and understand the coverage and deductibles before signing up for a policy.

Conclusion

Electric vehicles are an attractive option for those looking to save money on fuel costs and reduce their carbon footprint. With the Indian government introducing policies and incentives to promote EV adoption, the future looks bright for the electric vehicle industry in the country. If you're considering buying an electric vehicle, be sure to look into the various benefits and policies available to you. And don't forget to get electric vehicle insurance to protect your investment and save money on maintenance costs in the long run.   *Standard T&C Apply ** Tax benefits are subject to change in prevalent tax laws. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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