1. Tax Incentives for Electric Vehicles (EVs)
Electric vehicles (EVs) play a vital role in reducing India’s dependence on fossil fuels and cutting down harmful emissions. To encourage more people to buy EVs, the government offers several tax benefits. Here’s how you can benefit:
A. Section 80EEB: Deduction on EV Loan Interest
- Who can avail: Only individuals who buy an electric vehicle.
- What’s the benefit: You can claim a deduction of up to ₹1.5 lakh on the interest paid on a loan taken for purchasing an EV.
- Important to note: This is available only under the old scheme and applies only for individual buyers. The loan must be taken from a bank or a non-banking financial company (NBFC).
- Loan Period: The loan must be sanctioned anytime between 1 April 2019 and 31 March 2023.
B. FAME India Scheme (Phase II)
- The government also offers subsidies through the FAME II scheme to make EVs more affordable. These subsidies are not directly linked to taxes but help lower the upfront cost of EVs.
- Changes in the FAME Subsidy (2023):
- The FAME subsidy was reduced from ₹15,000 per kWh (up to 40% of the cost) to a flat 15% of the vehicle’s ex-factory price, effective June 1, 2023.
- This pricing support will end with the closure of the FAME II subsidy on March 31, 2024.
C. Electric Mobility Promotion Scheme (EMPS) 2025
In 2025, the updated Electric Mobility Promotion Scheme (EMPS) will offer reduced subsidies primarily for electric two- and three-wheelers:
- Two-Wheelers: ₹10,000 per vehicle
- Three-Wheelers: ₹25,000 – ₹50,000, depending on the vehicle category.
D. State-Level EV Incentives(https://e-amrit.niti.gov.in/state-level-policies)
- Some states, including Delhi, Maharashtra, and Tamil Nadu, offer additional benefits like exemptions from road tax and reduced registration fees to further promote EV adoption.