A two-wheeler can be a very attractive purchase for somebody on a budget. With the dazzling rides on the market today, there’s bound to be one that speaks to your heart and matches perfectly with your lifestyle. Unfortunately, though, it doesn’t come as cheap as you would like it to. Hence, you might feel tempted to take out a bike loan to cover some of the expenses. But what about tax? Is a Two-Wheeler Loan Eligible for Tax Redemption?
In India, if you agree to pay installments for a two-wheeler and purchase it after the stipulated period of time, you can claim tax deduction under section 80EE of income tax. Here we give you a detailed guide- what is bike loan tax deductible and how to claim it.
Is a Two-Wheeler Loan Eligible for Tax Redemption?
Unlike other types of two-wheeler loans, bike loans used for business purposes and registered in the business owner’s name are eligible for tax exemption, provided certain conditions are met. You can claim a tax refund on a personal loan for a motorcycle that you use for your business. In order to use a bike loan to claim a tax credit, you’ll need to prove that the bike was used solely for business purposes.
What are the conditions required?
Section 80C of the Income Tax Act 1961 provides tax advantages on two-wheelers provided the following requirements are met:
- An income tax deduction can be claimed if the borrower is a small company owner, self-employed person, or professional.
- If your business use of the motorcycle qualifies under IRS code Section 179, the interest paid on the bike loan will be fully deductible.
- Transportation expenditures, such as maintenance and fuel expenses undertaken for business operations, can also be claimed as a tax deduction.
- Part of the costs of car maintenance may be tax-deductible.
- The bike must be registered in the owner’s name in order to qualify for the discount. There is no tax exemption on the bike loan if the vehicle is not registered in the owner’s name, even if it is used for business reasons.
Free Advice- When taking a loan, It is important to research well, compare loans on the basis of important parameters like loan tenure, interest rate, foreclosure charges (if any), hidden costs, and the ease of getting a loan sanctioned, and choose a loan that fulfills your needs and suits you well.