During the maiden Budget, Finance Minister Nirmala Sitharaman has announced additional income tax deduction of Rs.1.5 lakh on the interest paid on the loan taken to purchase electric vehicles. Consumers can get a total benefit of up to Rs.2.5 lakh over the period of purchase.
The scheme is applicable to the loans taken on or before 31 March 2023. This initiative is considered under Phase-II of Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) Scheme.
With this announcement, the government has made consumers across the nation to gain interest in the electric vehicles sector. In addition, the Finance Minister has also proposed a GST reduction for these vehicles from the existing 12% to 5%. This has brought in a lot of enthusiasm in the electric vehicle manufacturers.
The above provisions make it evident that the government wishes to build a global hub of manufacturing in India. As a part of this mission, the Cabinet has set an outlay of Rs.10,000 crore for a period of three years with effect from 1 April 2019.
The adoption of electric vehicles is encouraged further by providing an upfront incentive on the purchase of such vehicles. There are plans to establish the necessary infrastructure for charging these vehicles.