Then get tax benefit on your car insurance
When it comes to saving income tax, insurance policies have always been a great tool. And if you ask whether you can avail tax deduction on a car insurance policy or not? Let us tell you, yes there is a way!
Customers can claim tax exemption for premium paid on car insurance if the car is being used for commercial purposes.
Using cars for commercial purpose
Business only – All the expenses related to a car offered by the employer for business use, get a tax benefit, provided the bills, date of use, driving records, kilometers covered, etc are all maintained and can be shared. Along with this, the employer is also supposed to issue a certificate confirming that the car has been used for business purposes only.
Business and personal use – Under this situation, the car is owned by an employer. It can be used for both business and personal requirements. But the tax exemption will be calculated on the basis of cubic capacity of the car and the presence of a paid/official driver.
Is car insurance tax deductible for self-employed owners?
In the case where the car is in use for commercial purposes only, car insurance premium is applicable for tax benefit. This is a benefit provided to business owners as they are taking higher risks by offering the cars for helping with business related transportation.
How to avail tax exemption on car insurance premiums?
Step 1: Tax auditing
If you have a high business turnover, say Rs. 1 crore or more, then you must get an audit report from a chartered accountant for your accounts.
Step 2: Tax filing
You can contact a professional who can help you with the tax filing process. This is when you can submit an invoice of the premium amount you have paid or attach the car insurance policy along with other documents to avail tax exemption.
Step 3: Refund
After you are done filing taxes, the Income Tax department will then release the applicable refund once the documents have been verified.
Documents required to avail tax exemption
Below we have curated a basic list of documents you can submit for getting a tax exemption. There may be more documents required but that varies from insurer to insurer.
- Car registration fee
- Car’s original invoice
- Fuel expense bills
- Car insurance premium receipt
- Servicing and maintenance documents
Now you know under what conditions is the car insurance tax deductible and the documents required for the tax exemption process. You can now explore car insurance plans by simply downloading the Bajaj Finserv App.
Anywhere, Anytime insurance with the Bajaj Finserv App!
The Bajaj Finserv App is a high-utility app that takes care of all your financial needs including insurance. On the app, you can explore car insurance plans from our trusted partners. Here you can view product features, compare prices, and purchase a plan that is best suited to your needs. All this in a matter of minutes on our 100% digital platform and from the comfort of your home. It truly is becoming the new way to buy insurance.