Aimed at boosting eco-friendly vehicles, Finance Minister Nirmala Sitharaman on Friday proposed to provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles.
The finance minister said the initiative would lead to a benefit of around Rs 2.5 lakh for a customer during the entire duration of the loan. “Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles,” she said in her budget speech.
In order to make EVs affordable, the government has already moved the GST council to lower the tax rate on such vehicles from 12 to 5%, the finance minister said.
“Also to make electric vehicles affordable to consumers our government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs,” Nirmala said.
The finance minister further announced that customs duty is being exempted on certain parts of EVs to further incentivise e-mobility in the country.