It may come as a surprise but like medical insurance you can also make a claim for insurance paid towards securing your vehicle, but here there is a catch and that is all makes the difference. Not just any motor insurance claim be made for tax exemption but insurance on motors that are being used solely for the purpose of business can be claimed for tax purposes.
And here in taxpayer will need to put in a justification that the motor insurance amount in any way does not involve a personal element to it. So, the taxpayer needs to be maintaining such vehicle as business assets to be able to qualify to make claim for the motor insurance paid.
Also, the person making the claim should be in possession of the receipt against the insurance paid such that claim is not rejected.
There is also a case when the claim be made for vehicle insurance premium even if it is being used for both personal as well as business purpose. Herein the rebate is available in accordance with the time or proportion for which it is being used for business purposes. Say, if a car is being run for 12 hours say 9 hours for business and remaining for personal, taxpayer is allowed to make a claim for the insurance for this 9 hours of business use.
Documents to be kept
1. Vehicle insurance premium receipt
2. Vehicle registration fee
3. Fuel cost bills etc.
So, with all these documents you will also be able to claim for the tax rebate for vehicle insurance premium i.e. being used for business use.
How the claim is made?
The amount paid for availing motor insurance towards a vehicle i.e. being partially or wholly used for business purpose is taken as business expense and is hence available for exemption. Also the premium amount can be added to business losses in a year if any.