Can Tax Exemption Be Claimed On Two-wheeler Loans?

Two-wheelers are vital to middle-class households since they are the most convenient mode of daily mobility. Two-wheeled vehicles are superior to four-wheeled vehicles because they are fuel-efficient and simple to operate.

Despite the widespread availability of two-wheeled vehicles, purchasing one with cash is challenging. Here is where banks and non-bank financial companies (NBFCs) come in, as they can provide cost-effective loans. ##

All banks and NBFCs in India can offer two-wheeler loans, and the vehicles are registered as security or collateral. Consider obtaining a personal loan to acquire your ideal bike. Yet, the interest rate on a personal loan may be higher than that on loan for a motorbike. *

How Do You Get a Motorcycle Loan?

The process of obtaining a loan is now considerably more convenient. You may quickly check online for numerous agencies, compare their interest rates, and utilise the online EMI calculator to establish your EMI amounts. The eligibility conditions, including age, evidence of address, and proof of identity, are also available online. While applying for the loan, also invest in insurance. Purchasing car or bike insurance is the most prudent measure to protect yourself from such unfortunate occurrences.

While buying insurance, compare the policies’ benefits and the car or bike insurance premium online. 

The Indian Income Tax Act allows you to declare the motorbike as a business asset. The interest that will be paid on loan is exempt from taxation. Section 80C of the Income Tax Code permits an annual maximum of Rs 1.5 lakh. **

An independent contractor is eligible for benefits based on their business. The two-wheeler loan interest is exempt from tax, not principal payments. The vehicle may only be used for commercial purposes. The vehicle registration must be in the name of the business or the primary owner to qualify for a tax deduction. **

3 tax benefits are associated with financing the purchase of a motorbike for business use:

• Business Expense Interests: As a business owner who has taken out a Two-wheeler loan, you can deduct the interest as a business expense. The expense will be deductible from taxes. * **
• Travel Expenses: You may deduct transportation expenses (fuel and maintenance) from your company expenses. *
• Depreciation Expenses: You may also claim a deduction for the amount spent on two-wheeler maintenance. *

Yet, it would help if you considered the following aspects of the tax exemption **:

• The IT evaluating officer has veto power over the legitimacy of the Two Wheeler Loan exemption application.
• The business owner is obligated to file returns (ITR-4).
• When issuing the loan, the entrepreneur must include the interest certificates provided by the banks/NBFCs.
• You must have receipts, invoices, and other necessary documentation to submit a claim.

What are the Options for Obtaining Two-Wheeler Tax Exemptions?

Various organisations provide bike rental services. One can’t predict the bike condition they will receive post-renting, but bike insurance can help you recoup the cost of damages to your motorbike or automobile. **

When choosing an insurance policy, understand how to claim insurance for a bike quickly, along with minimal premiums and maximum insurance benefits.* ##

You can claim tax deductions for a bike used for business, such as renting. In India, food delivery is a booming industry. The food delivery agents may also claim tax deductions on the interest rates of their bike loans. In brief, the country’s Income Tax legislation regards two-wheeler loans as a luxury. * **

Two-wheeler loans and tax deductions are available to business owners as a business cost. Bike Loan Interest rates are typically significantly lower than those of other loans. You will need the loan documentation, interest certificate, and invoices to claim a tax exemption for a two-wheeler loan.* **

*Standard T&C Apply

** Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.

## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply

‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.‘