Navigating EV Charging Reimbursements: How Do Fuel Allowances Work for Home Charging?

Hi team, I was wondering how fuel and maintenance perquisites are applied to electric vehicles. Currently, anything billable can be reimbursed to the employee as part of the fuel allowance, and employees can claim tax benefits. However, how do we go about EVs that are being charged at home? Please advise.

Thanks

It is difficult to fix a rate as there is so much variation in the mileage claimed by different OEMs, and the newer models are announcing unbelievable figures. As an encouragement to switch to EV vehicles, it is suggested to keep the same rate as applied to diesel and petrol vehicles of the same engine capacity.

Hi @KK!HR, Thanks for the reply.

Reimbursement of local conveyance is out of the scope of this discussion.

Let me elaborate on my question further.

Fuel Allowance in Salary Packages

Companies usually include fuel allowance in the salary or as part of choice pay/special allowances. If the employee opts for it, then the amount opted can be reimbursed to avail tax benefits.

Given the above context:

Petrol/CNG/Diesel will be reimbursed at actuals provided that the employee submits the bills. EVs charged at stations will also be reimbursed at actuals provided the employee submits the bills.

Reimbursement for Home Charging of EVs

The catch is, EVs can also be charged at home in addition to the charging stations. If the EV is charged at home, the bill usually includes the entire household.

In this case, how will the reimbursement procedure work?

Thanks in advance.

Hi, in addition to the above, you can educate employees about the IT exemption on the interest paid towards a loan taken specifically to purchase an electric vehicle.

Section 80EEB of the Income Tax Act

The 80EEB is a section of the Income Tax Act specially curated for electric vehicle buyers who avail of vehicle loans to purchase an EV. This section allows an individual taxpayer to claim a deduction of up to ₹1.5 lakh on the interest component of the vehicle loan taken to purchase the EV.

Hi Uhcia,

You claim that "EVs charged at stations will also be reimbursed at actuals provided the employee submits the bills."

Policy for EV Charging Reimbursement

So, make a policy and circulate it among eligible employees, stating that reimbursement for EVs will only be considered subject to the production of bills. This means that if they want an exemption, they should charge at stations only and submit bills.

You will not be able to differentiate from a common EB bill how many units are used for EV charging. Instead of complicating things further, just create a policy and circulate it among eligible employees.

Hi, For EV bills, the employee can submit the number of kW charged at home or outside. Based on the kW usage, the cost can be calculated. The home electricity cost can be determined by multiplying the kW charged by the unit price.

Regards,
Anjali

Certainly, let's break down the suggestion to keep the rate for Electric Vehicle (EV) vehicles the same as diesel and petrol vehicles of the same engine capacity.

Promoting Adoption of EVs

Encouraging the transition to electric vehicles is a crucial step towards achieving environmental sustainability and reducing reliance on fossil fuels. By offering a similar rate, it incentivizes consumers to consider EVs as a viable alternative.

Addressing Mileage Variations

Mileage claims can vary widely between different Original Equipment Manufacturers (OEMs) and even among models from the same OEM. This can make it challenging to establish a uniform rate based solely on mileage.

Leveling the Playing Field

Applying the same rate to vehicles of similar engine capacity, regardless of whether they are diesel, petrol, or electric, creates a level playing field for consumers. This ensures that they are not financially penalized or advantaged solely based on the type of vehicle they choose.

Focusing on Engine Capacity

Engine capacity is a well-established metric used to categorize and rate vehicles. It is a tangible and easily quantifiable measure, and it is not dependent on the type of fuel a vehicle uses. This makes it a practical basis for taxation or other financial considerations.

Encouraging Innovation in EV Technology

By maintaining consistent rates, it sends a clear signal to manufacturers that investing in improving the mileage of EVs is a valuable pursuit. This encourages ongoing innovation and technological advancements in the EV sector.

Reducing Consumer Confusion

Having consistent rates simplifies the decision-making process for consumers. They can compare vehicles based on their engine capacity without having to factor in potential variations in mileage claims between different fuel types.

Transition Period

Since EV technology is still evolving, there may be a period where the mileage claims for newer models are indeed impressive. However, as the technology matures and becomes more standardized, these variations are likely to narrow.

Environmental Considerations

Encouraging the use of electric vehicles is aligned with environmental goals, as they produce zero tailpipe emissions. This contributes to reducing air pollution and combating climate change.

In summary, maintaining consistent rates for vehicles of similar engine capacity, regardless of their fuel type, provides a practical and fair approach. It supports the transition to more sustainable transportation options while accounting for the variability in mileage claims across different OEMs and technologies. This approach can help strike a balance between incentivizing EV adoption and ensuring fairness for consumers.

Thanks,