In order to promote and motivate individuals to buy electric vehicles, the Government of India in Budget 2019 announced to provide a deduction for the purchase of an electric vehicle. A new section 80EEB was introduced. It allows deduction on the interest paid on the loan for the purchase of an electric vehicle.
Who is Eligible to Claim Deduction Under Section 80EEB?
Only Individuals can claim deductions under section 80EEB of the Income Tax Act. Any other entity i.e. a partnership firm, HUF, a company or AOP cannot claim deduction under this section.
What are the Conditions to Claim Deductions Under Section 80EEB?
- The loan that is taken for the purchase of an electric vehicle must be taken from a financial institution or an NBFC
- The loan taken for the purpose of buying an electric vehicle must be sanctioned between April 1, 2019 and March 31, 2023
- Deductions under section 80EEB are effective from AY 2020-21
- A deduction can be claimed on the loan for the purchase of 2 wheeler as well as 4 wheeler
What is the Deduction Amount available Under Section 80EEB?
An individual taxpayer can claim interest on loan of an electric vehicle of upto INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. Additionally, you can also claim depreciation as a business expense on the asset. It is to be noted that in order to claim the business expense the vehicle is registered in the name of the owner or the business enterprise. Individual taxpayers must also make sure to have all the necessary documents when filing an income tax return.
No, one can only claim a deduction u/s 80EEB on the interest payment of the loan.
An individual can claim a deduction under this section until the repayment of the loan.
No, in order to claim a deduction under section 80EEB the loan must be taken from a financial institution or an NBFC