Buying a vehicle may entail some tax benefits as well. However, it is not applicable in all cases. The tax benefits can be availed only under certain conditions.
In case you have a business or profession, and the vehicle is being used in the course of your business or profession, you can claim a depreciation benefit under the Income Tax Act. The depreciation amount will, in effect, reduce your total taxable income. Accordingly, it will reduce your total tax liability.
It is to be noted that this benefit is not available if you have only a salary income and you purchase a vehicle for your use.You should be conducting some business or engaged in a profession and the vehicle must be used for the purpose of that business or profession to claim this benefit.
Depreciation is a non-cash expense that results from a reduction in the value of a capital asset, including a vehicle. Under the Income Tax Act, you can claim an entire year's depreciation in case the vehicle is used for more than 180 days in the year. In case the vehicle is used for lesser than that, only half of the depreciation is allowed under the Act. However, in the following financial year and thereafter, depreciation is allowed on the written down value. In order to claim depreciation on a vehicle, you must be its owner.
If you are engaged in a business or profession, any expenditure incurred on the business is allowed as a deduction from the profits. This includes, fuel expenses, vehicle repairs and maintenance expenses, and cost of vehicle insurance. You should maintain records for your vehicle to establish the extent of its use for business vis-a-vis for personal use, if any.
Further, in case you have taken a loan for its purchase, the interest on the loan will be allowed as business expenditure.
These deductions cannot be claimed by a salaried individual, who does not have any income from a business or profession. For a salaried person, the vehicle's expenses will be personal expenditure and cannot be claimed as an income tax deduction.
SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich
For further information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300
OR
You can write to us at
Invest [at] SaveTaxGetRich [dot] Com
No comments:
Post a Comment