With an aim to boost the sales of Electric Vehicles (EVs), Nirmala Sitharaman, in her maiden Parliament Budget speech, announced tax sops for loans to buy them.
An additional income tax deduction of Rs 1.5 lakh will be provided on the interest paid on loans taken to purchase EVs. This amounts to a benefit of around Rs 2.5 lakh over the loan period to taxpayers who take the vehicle loans.
Further, the Modi 2.0 government has already moved the GST council to lower the GST rate on EVs from 12% to 5%.
"Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of Electric Vehicles", she said in the speech.
The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme was launched to promote eco-friendly vehicles in the country. The second phase of the scheme was launched in April 2015. Under this phase, only advanced battery and registered e-vehicles will be incentivised with greater emphasis on providing affordable and environment-friendly public transportation options for the common man.
The government also aims to include solar storage batteries and set up sufficient charging infrastructure to boost their efforts.
Sitharaman also announced an exemption from customs duty on certain parts of electric vehicles.