Purchasing a car is a significant milestone for many individuals in India, but understanding the tax implications is crucial. Tax benefits for car loans are primarily available for self-employed individuals or business owners who can classify their vehicle as a business expense. Under Section 80D of the Income Tax Act, these individuals can claim deductions for the car loan interest, depreciation, and related fuel and maintenance costs. However, salaried individuals can only claim these benefits if they can prove that the vehicle is used for business purposes. For instance, if a car is used 60% for business and 40% for personal use, only 60% of the expenses can be claimed. Additionally, the Indian government previously offered tax deductions of up to ₹1,50,000 for electric vehicle loans sanctioned between April 1, 2019, and March 31, 2023, but this benefit is no longer available. Taxpayers are advised to maintain detailed records of their vehicle usage and expenses to support their claims.