1. The Depreciation Benefit (Section 32 of Income Tax Act)
If a business buys a car and puts it to “use” for business purposes, it is treated as an asset. The cost of the car is not a one-time expense but is written off over time via depreciation.
The Rule: If an asset is used for less than 180 days in a financial year (which applies to a car bought in December, as the year ends on March 31st), the business can claim 50% of the normal depreciation rate.
The Math:
Normal Car Depreciation Rate: 15%
Since it’s Dec (less than 180 days left in FY): You claim 7.5% depreciation.
Example: On a ₹20 Lakh Kia Seltos, you can show ₹1.5 Lakhs (7.5%) as a “loss” or expense in your P&L statement.
The Saving: This reduces your taxable profit by ₹1.5 Lakhs. If you are in the 30% tax bracket, you save approx ₹45,000 in pure tax just by booking the asset in this financial year.
2. Why December specifically? (The “Double Saving” Pitch)
While the tax law is the same whether you buy in December, January, or March (you still get the same 7.5% depreciation for this Financial Year), marketing teams push December for two practical financial reasons:
Price Hike Protection: Almost every car manufacturer in India (including Kia) raises ex-showroom prices by 2-4% in January. Buying in December saves you this cost (approx ₹30k – ₹50k on a Seltos).
Inventory Clearance (Year-End Discounts): Dealers are desperate to clear “2025 manufactured” stock before the year flips to 2026. This is when discounts are historically the highest.
Summary for the Campaign
When we say “Buy in December to Save Tax,” we are essentially telling business owners: “Buy now to book the asset in this Financial Year (saving ~₹45k in tax) + Save on the Jan Price Hike (~₹40k) + Get Year-End Discount (~₹50k).”
Total Benefit: ~₹1.35 Lakhs compared to buying the same car in January.