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Tax benefits on car loan depends on uses of car.
Car Loan can help you save on tax If you are a self-employed professional or business owner and use the car for business purposes. But a salaried employee cannot claim tax deductions on Car Loan interest repayments like with a Home Loan. The reason behind this is that a car is considered as a luxury product.
Also, If a Car is used for business purposes, then Depreciation on Car can be claimed as an expense. This depreciation is allowed to be claimed irrespective of whether the car is purchased through loan or without a loan.
The depreciation on Car is allowed to be claimed @ 15% every year. This will again reduce the taxable profits even further and decrease the tax liability.
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