India is the biggest market for two-wheelers all over the world. Traveling through bikes is the easiest way to zip through city traffic. They are extremely fuel-efficient It is a highly affordable mode of transport for a middle and lower section of society. Despite being affordable, everyone may not have the disposable cash to pay upfront for a two-wheeler. At that time, Two-wheeler loans make it easier to fulfill the dream of cruising on the road.
If you have purchased two-wheeler loans for commercial purposes, then you can also claim tax benefits on two-wheeler loans in India. You are required to declare the vehicle as a business asset, the interest paid towards the loan can be used as a deduction under Section 80 C of the Income Tax Act subject to a maximum of Rs 1.5 lakh in a financial year.
Do keep in mind that the bike loan tax exemption is available only on the interest component and not on the principal repayment. Also, as mentioned, the vehicle should be used for business purposes and will have to be registered either in the name of the business or the primary business owner/freelancer to avail of the tax exemption.
List of expenses eligible for tax exemptions
As per the IT law, income tax redemption on two-wheeler loans is available for the following three expenses:
Interest: The interest amount incurred by the business owner on availing of the vehicle loan can be claimed as a business expense.
Depreciation cost: Part of the expenses incurred for maintaining the bike can be claimed as a deduction under depreciation cost.
Transportation cost: Fuel and maintenance expenses can also be claimed as a business expense.
Some special provisions for electric scooters