Section 80EEB of Income Tax Act relates to deduction in respect of purchase of electric vehicle, which gives Electric Vehicle Tax Benefit on the purchase of the same.
There has never been a better moment to purchase an EV car, as India’s EV sales are increasing annually.
These economical and environmentally friendly substitutes for traditional gasoline or diesel cars open the door to a more sustainable future and amazing developments in automotive technology that result in remarkable performance capabilities.
During the Union Budget 2023 presentation, Finance Minister Nirmala Sitharaman said that extending battery subsidies for an additional year would lower the cost of electric vehicles (EVs) in India.
You can claim up to Rs. 1.5 lakh in tax savings on interest paid on a loan taken out especially to buy an electric automobile under Section 80EEB of the Income Tax Act. To claim the 80EEB deduction, however, a number of limitations and requirements pertaining to the loan issuer and the electric vehicle must be adhered to.
Only if the loan is approved between January 1, 2019, and March 31, 2023, may you take advantage of the tax deduction benefits.
Electric Vehicle Tax Benefit Under Section 80EEB of Income Tax Act?
Section 80EEB of Income Tax Act relates to deduction in respect of purchase of electric vehicle, which gives Electric Vehicle Tax Benefit on the purchase of the same.
In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle.
The deduction shall not exceed one lakh and fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2020 and subsequent assessment years.
Conditions For Availing Electric Vehicle Tax Benefit Under Section 80EEB of Income Tax Act
The deduction shall be subject to the condition that the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 2023.
Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.
Terminology Under Section 80EEB of Income Tax Act
The term “electric vehicle” means a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by a traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy.
The term “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act and includes any deposit taking non-banking financial company or a systemically important non-deposit taking non-banking financial company as defined in clauses (e) and (g) of Explanation 4 to section 43B.]
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