New Delhi: Loan is one of the best alternatives for people who don’t have ample reserves and facing a monetary shortfall in buying things. Scheduled commercial banks, microsize lenders, non-banking financial companies (NBFCs) collectively target the basic and essential requirements following which they design customised credit facilities. Two-wheeler loans are the next thing which is becoming popular with the introduction of costlier bikes and increasing penetration of automakers in the rural and remote geographies.
Interestingly, people are eligible to claim an income tax deduction on the two-wheeler loans subject to a set of definitive conditions. According to the present income tax framework, a person can claim an income tax deduction on the two-wheeler loan if you are a small business owner or a professional or a self-employed individual. Individuals can claim tax deductions for business purposes or if they are self-employed.
According to the present guidelines of Income Tax, you can claim a tax deduction on interest paid on the two-wheeler loan as a business expense if you are a business owner or a freelancer who is using the two-wheeler for professional purposes. Further, a deduction can also be claimed on the transportation costs including fuel and maintenance of the two-wheeler incurred as part of a business expense. In some cases, a portion of expenses incurred to maintain the vehicle’s life can also be claimed as a deduction.
The vehicle is mandated to be used for business purposes and the two-wheeler should be registered under the name of business owner. People looking to claim a tax deduction on two-wheeler loans are required to file your ITR-4 including the interest certificates issued by the bank. All the receipts, invoices and other documents of the transactions should be kept safely to claim the expenses. However, the veto power lies with the I-T assessing officer to decide the legitimacy of the two-wheeler loan deduction claimed.