About section 80EEB
- To promote the electric vehicles in the country as a measure to combat the rising pollution the Union Budged of 2019 was the announcement from the government of India to provide an incentive for the purchase of an electric vehicle.
- During her budget speech, the Finance Minister announced that vehicles with advanced batter and registered e-vehicles will be incentivised under the scheme.
- A new section 80EEB was introduced which allows a deduction for interest paid on the loan amount taken for the purchase of electric vehicle starting from the assessment year 2020 – 2021.
As per this section, individuals can avail for a deduction amount of up to Rs 1,50,000 per annum on payment of interest on a loan secured for the purchase of an electric vehicle.
The electric vehicle can either be purchased for individual use or business purpose. This deduction will facilitate individuals who are owning an electric vehicle for personal use to claim the interest paid on the vehicle loan.
Please Note: Individual taxpayers should obtain interest paid certificate and keep all the necessary documents such as tax invoice and loan documents handy at the time of filing of the Income Tax returns.
Eligibility Criteria under Section 80EEB
- As per the Section 80EEB, an Electric Vehicle refers to a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery which is installed in the vehicle and has such electric regenerative braking system, which upon during braking provides for the conversion of vehicles kinetic energy into electrical energy.
- The loan for the purchase of electric vehicle should be taken from a financial institution or a non-banking financial company.
- The loan should be sanctioned any time between the period starting from April 1, 2019, until March 31, 2023.
In the absence of any specification, the deduction under Section 80EEB is available to both the residents as well as a non-resident individual.
The maximum amount of deduction available under Section 80EEB is Rs 1,50,000 per annum.
Once the deduction concerning the interest amount has been claimed under Section 80EEB, no further deduction can be claimed for such interest payment under any other provisions of the Act for the same or any other assessment year.
