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You can get income tax deductions on loans to buy electric vehicles.
The Centre has announced multiple measures including financial packages to make electric vehicle (EV) popular in the country. With more and more companies trying to enter this emerging segment, EV might become popular in the country. Hyundai, MG, Mahindra, Tata, Audi and Mercedes-Benz India are exploring experimenting with a small batch of EV units. As the segment shows promise of growth, more and more lenders are offering loans to the customers. Money9 gives you a brief guideline of EV loan. Lenders such as SBI and HDFC Bank are offering loans to that have lower interest rate than normal car loans.
Loan amount
In India, the price of EVs range from Rs 12 lakh and goes up to Rs 70 lakh. One can get a maximum of 48-50 times of his/her gross monthly income as EV loan. The minimum income of the person should be not less than Rs 2 lakh per annum.
If your monthly salary is Rs 3 lakh, then you can be eligible for a loan up to Rs 13 lakh.
On the other hand for the self-employed, the loan amount would be 3-4 times of the person’s net yearly income. Lenders generally give 90% of the on-road price of the EV as loan amount.
Interest rate
Interest rate of EV loan varies from 7.5% to 20%, depending upon the amount and the tenure of the loan. Generally, repayment tenure varies between three and eight years. Normally car loans vary between three and seven years.
For EV, repayment tenure generally goes up to 8 years, one year more than normal car loan. All lenders offer an interest rate concession between 20 basis points and 50 basis points for EV loan than normal car loan. SBI offers lowest-ever EV loan starting from 7.55%.
Eligibility criteria
Any person aged between 18 years and 65 years and having a regular income of a minimum of Rs 15,000 per month is eligible to apply for a loan. The person should have valid PAN, Aadhaar and Form 16.
A good credit score is always an advantage when you apply for a loan. If you have credit score below 600, then car loan will not be processed. You should have a credit score at least above 600 then car loan would be processed.
Documents required
To apply for EV loan, you need some basic documents like PAN card and Aadhaar card. For address proof, you have to submit any utility bill or passport or rent agreement or sale deed.
Bank statement of the past six months, salary slips for three months and latest Form 16 have to be submitted at the bank.
For the self-employed and businessmen, registration certificate, GST registration, property documents, electricity bill, Form 16 and ITRs are required along with bank statement.
Tax benefits
Unlike car loan, an individual can get tax benefits is he/she buys an electric vehicle. A deduction for interest payments up to Rs 1.5 lakh is available under section 80 EEB of IT Act.
An individual taxpayer may have an electric vehicle for personal use. The tax deduction would facilitate individuals having an electric vehicle for personal use to claim the interest paid on the vehicle loan up to Rs 1.5 lakh.
In case of business use, an individual can also claim the deduction up to Rs 1.5 lakh under section 80 EEB.
Top lenders
State Bank of India was the first lender in the country to offer EV loan. Other leading private and public lenders such as HDFC, ICICI, Bank of Baroda, Axis Bank and others also offer loan to buy EV vehicle.
A couple of NBFCs and some mobile wallet and payment aggregators like Paytm, Amazone Pay, Credit fare and others are also present in this segment.