Question 1

What is the depreciation rate on an electric vehicle for a business in India?

Accepted Answer

Appendix I to the Income-tax Rules, 2026 lists “electrically operated vehicles including battery powered or fuel-cell powered vehicles” at 40% of written down value — against 15% for a motor car not run on hire and 30% for buses, lorries and taxis that are. Confirm the classification with your advisor.

Question 2

Is this the same as additional depreciation?

Accepted Answer

No. The extra 20% first-year allowance under section 33(8) reaches only manufacturing and power businesses, and sub-clause (8)(d)(iii) excludes road transport vehicles outright.

Question 3

Can a lessee claim depreciation on a leased EV?

Accepted Answer

No. Section 33(1) gives the deduction to the owner. On an operating lease the lessor claims it and prices the benefit into the rental; you deduct the rental instead. Ask to see the residual and tax assumptions behind a quote.

Question 4

Does a 40% rate mean the vehicle loses 40% of its value a year?

Accepted Answer

No. It is a statutory write-down on a block of assets, not a valuation. After three full years book value is 21.6% of cost, usually well below what a documented fleet EV will fetch. They share a word and nothing else.

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