New Delhi . A tax rebate of up to Rs 3.5 lakh is available from the government on home loan. In this, tax exemption of Rs 1.5 lakh is available on interest under 80C, whereas under 24B, tax exemption of up to Rs 2 lakh per annum is given on the principal amount, but do you know that like home loan, tax exemption is also available on car loan. Can. After all, complete information about how you can avail tax exemption on both these loans is being given here. Actually, car is considered a luxury product, hence generally the benefit of tax exemption is not available on its loan, but if you are a professional i.e. doctor, engineer or lawyer or use your car for business, then under the Income Tax Act. Can claim in return. A working person will not get the benefit of tax concession on car loan. If you want to claim tax exemption on a car loan, it is important that it is used for business purposes only. Like you run it on rent, use it in a travel agency or run it yourself for business purposes. Even if you are a professional, you can claim tax exemption equal to the annual interest paid on the car loan. For this, the amount of interest paid will have to be shown as cost of business while filing the return. Not only the interest on car loan, but also the expenses incurred on fuel used annually and maintenance of the car can be included in income tax exemption. Apart from this, you can also avail concession on the annual reduction in the purchase price of the car i.e. depreciation cost. However, tax exemption is available only on a certain amount of fuel expenditure and the depreciation cost is also 15-20 per cent of the car's value annually. Thus, if your annual income is Rs 10 lakh and you pay car loan interest of Rs 70 thousand, then income tax will be calculated on Rs 9.30 lakh. This does not include fuel and depreciation costs.
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