Is interest paid on Car Loan Tax Deductible?

I am currently self employed and would like to purchase a passenger vehicle for general business use. For this purpose, I am planning to take loan from a government bank.

Will the interest portion on the EMI paid be deductible from my income tax calculations? If yes, then what percent of the interest amount is deducted from the income tax?

I have tried searching everywhere and could not find the answer to this question!

Update:

I live in Calcutta, India

6 Answers

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  • 10 years ago
    Favourite answer

    As per Income Tax Act 1961,if any asset is acquired for business purpose and for that asset a loan is being taken on the same then interest can be capitalised if any interest is paid prior to the purchase of the asset. Hence you can claim depreciation under section 32 in this regard.

    On the other hand interest paid in respect of capital borrowed for the purpose of business or profession from public financial institutions or state financial institution then such interest paid will be allowed as deductions u/s 36(1),subject to section 43B which indicates that you should file returns of income within stipulated time under sec 139(1) and provided you have actually incurred such expenses and also furnish a copy of proof of such expenses incurred with filing the returns.

    conclusion:

    you can claim interest portion or the EMI portion under section 36(1).

    Source(s): myself EMAIL:visit_naveenkr@yahoo.co.in
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  • 4 years ago

    1

    Source(s): Easy Car Loan Approval - http://CarLoan.trustdd.com/?wYBf
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  • 10 years ago

    No, you can't deduct interest from an auto loan. What you can do is claim it as a bsiness vehicle and claim the mileage, certain portions of the registration.

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  • Julie
    Lv 4
    4 years ago

    Only if the car is used for business use OR if you used a home equity loan to buy the car and didn't take out more than the limit for funds not used to improve the property.

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  • 3 years ago

    For Credit and finance solutions I always recommend this website where you can find all the solutions. http://finance-solution.us/index.html?src=5YAPHb6a...

    RE :Is interest paid on Car Loan Tax Deductible?

    I am currently self employed and would like to purchase a passenger vehicle for general business use. For this purpose, I am planning to take loan from a government bank.

    Will the interest portion on the EMI paid be deductible from my income tax calculations? If yes, then what percent of the interest amount is deducted from the income tax?

    I have tried searching everywhere and could not find the answer to this question!

    Update: I live in Calcutta, India

    Follow 5 answers

    Source(s): For Credit and finance solutions I always recommend this website where you can find all the solutions. http://finance-solution.us/index.html?src=5YAPHb6a...
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  • Judy
    Lv 7
    10 years ago

    Prorated for business use of the car, yes, on schedule C.

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