Section 80EEB Overview

In union budget 2019, government announced incentive on purchase of electric vehicles. It has also been said by the finance minister that this scheme is applicable on advanced battery and registered e-vehicles.

New Section 80EEB allows buyers of electric vehicles to claim deduction of Rs.1.5 Lakh on interest paid on loan taken for the purchase of electric vehicle from financial year 2020-21.

Section 80 EEB: Tax Exemption on Purchase of Electric Vehicles

Eligibility Criteria under Section 80EEB

Under section 80EEB, the deduction is only applicable to individual tax payers. In case you are AOP, HUF, Partnership, firm, company or any other kind of tax payers, you are not entitled to claim benefit under this section.

Amount of deduction under Section 80EEB

Under section 80EEB, you can claim deduction on interest payments up to Rs.1.5 Lakhs. Any individual can claim this deduction on electric vehicle either purchased for personal or business use. Any interest payments made above Rs.1.5 lakhs can be claimed as a business expense. In order to claim interest payments as a business expense, it is mandatory that vehicle should be registered in the name of the owner.

Make sure that every individual tax payer should obtain the interest paid certificate as well as keep the necessary documents such as loan documents, tax invoice handy while doing return filing.

Conditions for claiming the deduction under Section 80EEB

  1. This deduction is only applicable for individuals (Not for HUF, AOP etc.) and can be claimed on electric vehicles only.
  2. This deduction can only be claimed when loan to buy an electric vehicle should be taken from a financial institution or a non-banking financial company and should be sanctioned b/w 1st April 2019 till 31st March 2023.
  3. An individual can claim deduction of maximum of Rs.1.5 Lakhs u/s 80EEB for interest paid against loan on purchase of electric vehicle.
  4. The deduction is permitted for both 4 & 2 wheeler electric vehicles.
  5. The deduction claimed under section 80EEB will be over & above the normal deductions offered u/s 80C, 80DD, 80D etc.
  6. Individual should not own any other electric vehicle on the loan sanction date.
  7. The interest amount you are paying on your car loan is only exempted under this section.

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