Budget 2019: FM announces income tax rebate on interest of loan taken for EVs

In a bid to encourage mass adoption of electric vehicles, Finance Minister Nirmala Sitharaman Friday announced income tax rebates for consumers.

Sitharaman, in her maiden budget speech, proposed to extend income tax benefit of Rs 1.5 lakh on interest of loans taken to purchase electric vehicles to buyers. This would translate into benefits of Rs 2.5 lakh for every consumer purchasing an electric vehicle over the loan period, the minister said.

Additionally, the government has also urged the GST Council to reduce tax on electric vehicles to 5% from the current 12%, Sitharaman said. Internal combustion engine (ICE) powered vehicles are taxed at the highest tax slab of 28% and also levied a cess ranging from 1-15%.

Earlier in March 2019, the government also approved an outlay of Rs 10,000 crore under phase two of the FAME (Faster Adoption and Manufacturing of Electric Vehicles) India Initiative to incentivise sale of electric vehicles. A part of the outlay would also be utilised to set up charging infrastructure for such vehicles.