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  Monday, 02 July 2012
  4 Replies
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The Interest Paid on Car Loan Instalment, does it gives any benefit while claiming expenses in Income Tax. Also - any Tax Benefit on taking Car Loan through Private or PSU Banks
11 years ago
Hello Anil

Unlike Leasing where Lease Rentals have Income tax benefits,
Car Loan Interest payments can only be shown as deduction provided vehicle used for business usage while filing Tax returns and computing Net Profit. Its immaterial whether its taken from a Private or Nationalized Bank - same does not attract any difference in computation of tax structure.

Also - you can reduce your tax liability is by showing Car as physical asset and taking benefit through depreciation value - whose benefit can be taken while calculating your tax Liability.

If somehow - you are keen on knowing Leasing Concept in India, you can know more
Car Leasing in India
7 years ago

Can I avail tax benefits for my car loan that I am paying. I am paying 9855 per month for my car as a loan.
If yes, where should I mention that on the tax declaration form.

Is it possible?

7 years ago

There are no benefits for Salaried Assessee

However - if you are self Employed - You can claim in 3 Benefits on your car

1. Depreciation Benefits : By marking depreciation on car @ 15% on the original Invoice value

2. Interest Paid on Car Loan: Can show this as deduction, if vehicle used for Business Usage and deduct this expense from your firm gross profit to determine the tax liability. You need to obtain in car Loan statement from the bank showing actual interest paid to them
However - pls note that the Entire EMI will not be counted for this, as it has Principal and Interest component. Only Interest component needs to be taken in consideration

3. Fuel Expense, Maintenance Bill: All Fuel Expenses and Service bill for the car can also be shown as running expense and / or for maintenance upkeep of car. This can also be deducted as expense

Hope should help !!
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