Tax on two-wheel loans
Unless they fall under the category of electric vehicles, two-wheelers purchased for domestic use are not subject to a tax deduction. A two-wheeler registered in the name of the owner or the purchaser and used for professional purposes is tax deductible. If the client is a business owner, self-employed or professional, tax incentives are available on two-wheelers under section 80C of the Income Tax Act 1961 up to Rs 1.5 lakh only if the purchased bicycle or two-wheeler was purchased for commercial purposes or if the vehicle is an electric vehicle.
The ITR form must be fully completed and the interest certificates issued by the bank must be attached to claim tax exemption on your two-wheeler loan. However, borrowers should and should keep in mind that they can only qualify for tax deductions on their annual interest payments, transportation costs, and amortization costs.
Documents and eligibility criteria
One must meet the following eligibility criteria and keep documents ready before applying for a two-wheeler loan.
- The borrower must be 21 to 58 years old if he is employed and 21 to 65 years old if he is self-employed.
- The borrower must be an employee or self-employed.
- The borrower must have a minimum income of Rs 10,000 per month.
The borrower must keep his proof of identity, proof of address, proof of income, proof of age and bank account statement for the last 3 months.
Two-wheeler loan interest rates 2021
Here are our top 10 handpicked banks that currently promise the lowest interest rates on two-wheeled loans.
|No Sr.||Banks||Interest rate in%||Amount of the loan|
|1||Central Bank of India||7.25% to 7.70%||Rs 10 lake (max)|
|2||Bank of India||7.35% to 8.55%||Rs 50 lake (max)|
|3||National Bank of Punjab||8.70% to 10.05%||Rs 10 lake (max)|
|4||Bank Jammu and Kashmir||from 8.70%||Rs 2.5 lac (max)|
|5||Bank of Punjab and Sindh||9.00% from||Rs 10 lake (max)|
|6||Canara Bank||9.00% from||Rs 10 lake (max)|
|7||ICICI Bank||9.50% to 26.00%||Rs 3 lake (max)|
|8||IDBI Bank||9.80% to 9.90%||Rs. 1.20 lakes and more|
|9||Union Bank||9.90% to 10.00%||Rs 10 lake (max)|
|ten||IDFC Premier Bank||9.99 and above||Rs 3 lake and more|
|Source: Bank websites|