Auto Loan Calculator: Surprise! You can claim income tax exemption if your vehicle falls in this category

Auto Loan Calculator: If your are going to file Income Tax Return (ITR), then it is advisable to nurture all possible tax-saving options as a penny saved is penny earned. According to the tax and investment experts, if someone has bought an electric bike or car after availing an auto loan, then the interest paid on the electric vehicle while repaying the auto loan EMI is tax exempted. The maximum limit for this tax exemption is Rs 1.5 lakh per annum. What is most important is that this is different from the Section 80C tax deduction benefit.

Speaking on how an electric vehicle loan can help a taxpayer save tax, Kapil Rana, Chairman and Founder at HostBooks Limited said, "An earning individual, who is going to file ITR can claim a tax deduction of up to Rs 1,50,000 for the interest repayment for a loan taken for the purchase of an electric vehicle. To be eligible, the loan should have been sanctioned between 1st April 2019 and 31st March 2023." 

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Rana went on to add that we all give our best to reduce our tax liability for each financial year. If you have taken one step further to look into tax-saving investment options, you might be familiar with Section 80C of the Income Tax Act, 1961. Being one of the most popular tax-saving options, most individuals claim deductions under this section to lower their taxes. It facilitates deductions of up to Rs 150,000 per annum. However, it might not be adequate to meet your financial goals.

Highlighting the benefit of electric auto loan in Income Tax Return filing; Jitendra Solanki, a SEBI registered tax and investment expert said, "This income tax exemption is different from the Section 80C benefit as the interest repayment of an electric vehicle loan is tax exempted under Section 80EEB of the Income Tax Act 1961. So, if someone has taken loan for purchasing electric vehicle (either two wheeler or four wheeler), then income tax exemption claim can be made under the above-mentioned section on up to Rs 1.5 lakh interest repayment even after exhausting the Section 80C benefit."