Did you know you can get tax deduction against interest payment on car loan?
If you are planning to buy a new car, you may consider different electric vehicles available in the market. Not just because it is environment friendly, but also because it offers tax benefits. Yes you heard it right, tax benefits in the form of deduction against interest payment on car loans, which can help you in bringing down your taxable income and eventually the tax liability.
Just like deduction benefits available against home loan interest, in the union budget 2019, a new section 80EEB was introduced. Under this section, interest payments on car loans of up to Rs 1,50,000 is available as deduction to individual taxpayers who buy an electric vehicle.
Remember, that you should take a loan from a financial institution or a non-banking financial company for buying an electric vehicle, to claim the deduction.
You can still file a belated return
If you haven’t filed your income tax return (ITR) for the financial year 2019-20 (ie, the assessment year 2020-21) yet, you can still file it till March 31, 2021. However, if you file the return now, it will be considered a belated return, as you are filing it after the due date. Usually, 31st July of an assessment year remains the due date for filing ITR for the previous year, but because of a pandemic this time the due date was extended up to 10 January 2021.
If you file it now, you are also required to pay a delay penalty of Rs 10,000 along with panel interest on due taxes if any. However, filing your ITR is a must for various reasons. If you have not filed it yet, don’t delay it any further.
Should I book profits?
Share markets recently touched new heights and once again there are numerous calls that we are handling on a daily basis on the theme of ‘should I redeem my investments’.
Please remember, your decision to enter or exit the market should not be based on market movement or levels. The decision should be based on your financial plan and future financial goals. For instance, if any of your goals is nearing, you may consider transferring your investments from equity mutual funds to the debt funds. Similarly, if you have invested in stocks and target price is achieved and you know the intrinsic value or say PE ratio is above the real value, you may consider liquidating your investments.
Otherwise, from the long-term perspective, stick to your asset allocation and if you find there are changes in asset allocation while reviewing it, you may need to switch profit from equity investments to the debt instruments, in order to bring it back in line.