A two-wheeler is the quickest way to travel around town. It makes navigating in heavy traffic easily, and it requires much less parking space. But a two-wheeler can get you to tax exemptions too. How? Let’s find out.
One of the best ways to save on your tax through your two-wheeler is to take a two-wheeler loan. You can avail tax exemption on multiple grounds through a loan. If you are a self-employed individual or a small-business owner, your two-wheeler loan can save you a lot of money. If you are a delivery person who has taken a two-wheeler loan, you get an exemption as well. But not all persons can get a tax exemption on a two-wheeler loan.
To claim a two-wheeler tax benefit, you need to fulfil the following conditions
- The vehicle must be used for business purposes. If you are a self-employed individual or a freelancer, the vehicle must be used only for professional purposes.
- The two-wheeler should be registered under the name of the business or the business owner.
- You must file your returns (ITR-4), and you must include the interest certificates issued by your lender.
- All your receipts, invoices and other documents of the transactions should be in place to claim these expenses.
- The ultimate power of deciding if your two-wheeler is applicable for tax exemption lies with the Income Tax Officer. He will assess your two-wheeler and your business, and decide if your claims for the exemption are legitimate.
If your two-wheeler is used for your business, you can claim for the following exemptions:
- If you are a self-employed person, you can claim benefits on your taxable income and the expenses you bear for growing your business.
- You can claim a deduction on the transportation costs, fuel and the expenses of maintaining the two-wheeler. You can list these costs as your business expense.
- In some instances, the expense of maintaining the life of the two-wheeler can also be shown as a business expense, if allowed.
- If your two-wheeler is on loan, you can claim the interest paid on your loan as a business expense. Some lenders also allow you to show the principle amount to avail tax exemptions.
If all these benefits make you want to take a two-wheeler, here are the eligibility criteria and the steps to take a two-wheeler loan:
- The bike loan applicant must be between 18-65 years of age.
- The applicant must show residential stability by living in the same house, rented or owned, for at least one year.
- The applicant must have a stable job for a minimum of one year. If self-employed, the applicant must show proof of IT returns of at least two years.
- The applicant must show an excellent CIBIL score as presented by the credit bureaus.
- The applicant should have a permanent telephone number along with the necessary documents required for loan approval.
Step 1: Choose a lender. Look at their bike loan interest rates. Compare and select the one which offers you the best deal.
Step 2: Fill an online form for a two-wheeler loan with your details. A representative of the lender will get in touch with you.
Step 2: Visit the showroom of your chosen two-wheeler’s dealership. A representative of the lender will guide you through the formalities.
Step 3: Submit the required documents, as stated by the representative. The lender will verify these documents.
Step 4: Once the loan is approved, you pick a two-wheeler of your choice and make the initial down payment. After the completion of all the formalities, you can take the two-wheeler home with you.
A two-wheeler is quick, and it can give your business the mobility it deserves.