Electric Vehicle: Taxation
Madam Finance Minister Nirmala Sitharaman has announced reduction of Goods and Service Tax on Electric Vehicles (EVs) from 12% to 5%. As per her statement the Government has already moved GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%. Also to make EVs affordable for consumers, Government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs. Such a huge deduction would definitely help the assessees to make a decision towards electronic vehicles and help make a sustainable economy.
A new section 80EEB has been inserted to provide for a deduction of Rs. 1.5 lakhs in respect of interest on loan taken for purchase of an electric vehicle from any financial institution.
An electric vehicle (EV), also referred to as an electric drive vehicle, is a vehicle which uses one or more electric motors for propulsion. Depending on the type of vehicle, motion may be provided by wheels or propellers driven by rotary motors, or in the case of tracked vehicles, by linear motors. Electric vehicles can include electric cars, electric trains, electric trucks, electric lorries, electric airplanes, electric boats, electric motorcycles and scooters, and electric spacecraft.
Presenting the Budget for 2019-20, Finance Minister Nirmala Sitharaman said the government has already approved Rs 10,000 crore for Faster Adoption and Manufacturing of Hybrid and Electric Vehicles i.e. FAME 2 scheme on April 1, 2019 to encourage faster adoption of electric vehicles by providing right incentives and charging infrastructure. FM also said there will be a comprehensive restructuring of National Highways Programme to ensure creation of National Highways Grid of desirable capacity.
While presenting the Economic Survey yesterday, Sitharaman said the country must emphasize on electric vehicles as these represent the next generation in sustainable mobility and appropriate policy measures are needed to lower the overall lifetime ownership costs to make them an attractive alternative to consumers.