Gov. will provide additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to buy E-vehicles
New Delhi, July 5: The Modi government 2.0 in its Union Budget announcement went all out to promote green mobility in the country and envisioned India to become global hub of manufacturing of electric vehicles. Finance Minister Nirmala Sitharaman in her maiden Budget speech announced a slew of measures to attract more buyers for this eco-friendly mode of transport.
“Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles. Inclusion of solar storage batteries and charging infrastructure in the above scheme will boost our efforts,” said Sitharaman in her speech.
She said, the government has already moved GST council to lower the GST rate on electric vehicles from 12% to 5%. “Also to make electric vehicle affordable to consumers, our government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle.”
Industry stakeholders were of course very upbeat about the announcement.
“The recommendation to the GST Council to reduce the GST rate on electric cars from 12% to 5%, together with the customs duty exemptions proposed on EV parts and the increase in SAD and RI cess on petrol or diesel vehicles, would make EV’s more affordable,” said MS Mani, Partner, Deloitte India.
Sitharaman also said that the Phase-II of FAME Scheme, following approval of the Cabinet with an outlay of Rs 10,000 crore for a period of 3 years, has commenced from April 1, 2019. “The main objective of the scheme is to encourage faster adoption of electric vehicles by way of offering upfront incentive on purchase of electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles. Only advanced battery and registered e-vehicles will be incentivised under the scheme with greater emphasis on providing affordable and environment friendly public transportation options for the common man.”
Ayush Lohia, CEO, Lohia Auto Industries, said it’s a welcoming move that the government has reduced GST on electric vehicle to 5% and also allocated Rs 10,000 crore for faster adoption of electric vehicles and has announced upfront incentives for electric vehicles.
“This will help attract investment for manufacturer and ensure clean energy over the time. This decision will represent the next generation in sustainable mobility and make them an attractive alternative to consumers. To give more boost to e-vehicle sector. We propose a more cautious, clear and realistic road map towards the adoption of EVs and hoping more positive step will be taken by government to cheer up the overall industry and consumer both.”