The government has approved Rs 10,000 crore for the FAME II scheme.
The Union Budget 2019 announcement has come as a great relief for the electric car buyers and car manufacturers that are ready to bring in electric vehicles in the country. During the budget presentation, Finance Minister Nirmala Sitharaman has announced the electric vehicles’ buyers will get an income tax deduction of Rs 1.5 lakh on the car loans.
The government has also asked the ST Council to reduce tax rate on electric vehicles to 5% from 12%. Besides this, the government has approved Rs 10,000 crore for the FAME II (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles) scheme, which was implemented on 1st April, 2019. Read – MG eZS Electric SUV Launch Details Announced
Announcing the budget 2019, Finance Minister Nirmala Sitharaman said, “We want to develop India as a manufacturing hub for electric vehicles and want to encourage the purchase of these vehicles. The government has already moved GST council to lower the GST rate on electric vehicles from 12 per cent to 5 per cent. Also to make electric vehicles affordable for consumers our government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase EVs.”
With the income tax deduction, the electric vehicle buyers will save up to Rs 2.5 lakh over the loan period. Additionally, the exempted customs duty on certain components of electric vehicles will further benefit buyers. Read – Hyundai Kona Electric SUV To Be Sold In 16 Cities
While the Union Budget 2019 encourages use of electric vehicles, there is no relief for petrol and diesel vehicle buyers. The budget has proposed additional excise duty and road cess on petrol and diesel by Rs 1 per litre.
Aiming to encourage faster adoption of electric vehicles, Niti Aayog has already asked to put a ban on all petrol and CNG-powered two and three-wheelers by 2025. The government also aims to setup infrastructure for electric vehicles and has announced to develop India’s first highway corridors for electric vehicles with 18 charging stations.