Key Insights 

1. You can save money on your EV loan by claiming up to ₹1,50,000 as a deduction on the interest you pay under Section 80EEB. This reduces your taxable income.

2. If you are self-employed, you can deduct the interest on your car loan as a business expense. You can also claim 15% annual depreciation. These are two ways to save on taxes.

3. You can use a car loan tax benefits calculator to help plan your savings. Remember, salaried employees who use their cars only for personal reasons cannot claim these deductions.

Did you know that your car loan could help lower your tax bill? Learn how tax benefits on car loans can help salaried professionals. You can save money when you buying your dream vehicle.

Car loan tax benefits can help you manage your finances, much like sharing a ride helps cut travel costs. These benefits lower your taxable income through certain deductions allowed by the Income Tax Act for a tax benefit on a car loan for salaried employees in India

Example:

I always use car loan benefits in the income tax calculator. I found that the interest on an ₹8,00,000 loan's interest on a car loan deduction in income tax saved me ₹15,600 annually under Section 80EE. This confirms that the car loan interest is tax-deductible in India, when planning my income tax benefits for a new car purchase in India.

Key Benefits of Car Loans in Income Tax

Thinking about buying a car? A car loan not only helps you pay for it, but it can also offer tax savings and help you keep more of your money. Here’s how these benefits can work for you.

Here is the list of the Income Tax benefits on a Car Loan:
 

When you buy a car, you can also lower your taxes. Take advantage of these benefits to save more and improve your finances.

Bonus Tip: The income tax assessing officer can reject your tax deduction claim if they think you are not using the car for work or business purposes.

How can you claim tax benefits on a car loan?

If you are a salaried employee, you cannot get tax benefits on a car loan. But if you own a business, you can claim tax savings when you file your income tax return.

To get a tax rebate on your car loan, you need to show the interest paid as a business expense. You can ask your lender for an interest certificate that shows how much interest you have paid on the car loan. This will help you claim tax savings.

Bonus Tip: You can get tax deductions on your car loan if you use the car for real business needs, not for personal use.

Conclusion

You can use your car loan to save on taxes. With the right plan, you might benefit from EV incentives or business deductions, making your vehicle purchase a smarter financial move.

FAQS

I recently bought a car with a car loan. What tax saving options or tax implications should I be aware of when filing my ITR?  

If you use the car for business, you can claim the loan interest as a business expense. For electric vehicles, you can claim a deduction of up to ₹1,50,000 under Section 80EEB of the Income Tax Act, whether you use the car for personal or business purposes. If you are salaried and use the car only for personal reasons, there is no tax benefit. To claim any deduction, make sure to get the interest certificate from your lender.

Can a salaried person get tax relief on car loan premiums? 

No, usually a salaried person cannot claim tax relief on car loan payments for a personal vehicle.

What are the benefits of a vehicle loan for income tax?  

Businesses can benefit from a car loan at tax time by deducting the loan interest as a business expense, claiming depreciation on the vehicle, and writing off costs such as fuel and maintenance.

Does a car loan reduce my income tax?  

A personal car loan usually does not lower your income tax. But if you use the car for business, you may be able to claim a deduction.

Can I claim 100% tax benefit as co-owner?

Yes, you can claim the full tax benefit if the other co-owner does not use their share of the exemption. You will need to provide a declaration to do this.

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About the Author

LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.