New car also saves income tax
Income tax is also saved by car… Yes, it is true. If you are a salaried person, then your biggest tension would be about saving income tax. If you have to pay income tax despite taking insurance, NPS, health insurance and home loan, then you should know about the ways to save income tax on a new car. Even on buying a new car, you can get income tax exemption of up to Rs 1.50 lakh.
There are such provisions in the Income Tax Act that people can avail income tax exemption on their car also. There are both options available, from buying a new car to renting a car. Let us understand both these options.
Save income tax on new car
If you want to save income tax on a new car. Then Section 80EEB of the Income Tax Act helps you. This provision of the Income Tax Act gives you income tax exemption of up to Rs 1.50 lakh on a car taken for personal use. If you buy a new electric car, then you can get tax exemption on interest paid on auto loan up to Rs 1.50 lakh.
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It should be kept in mind that exemption under this provision in income tax will be available only on the purchase of a new electric car. This provision has been included in the Income Tax Law with the aim of promoting electric cars by the government.
Rental car also saves tax
Now let us tell you that you can also avail income tax exemption on rental car. If you fall in high tax bracket, then this option will prove to be very useful for you. Most companies offer car lease finance option to their employees, although this option is available to every employee. But companies offer it to employees with a fixed salary (usually high salary).
In this, the company owns the car and leases it to the employee. After this, the company reimburses the expenses incurred on lease rent, maintenance and driver’s salary of the car, i.e. returns it back to the employee. This does not form part of his salary and he gets relief from income tax on it.
According to a news from ET, just one thing has to be kept in mind that the car which the company gives on lease finance, should be for both personal and professional use of the employee. Tax benefits are not available only on cars for personal use.