Section 80EEB – Income Tax Benefit on Purchase of Electric Vehicle

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Now a day’s the name of an Electric Vehicle (EV) is in trend, various benefits are available on the purchase of an Electric Vehicle. So here we will see what are the tax benefits available on the purchase of an Electric Vehicle.

What is Section 80EEB?

In union budget 2019, the government has announced tax benefits on the purchase of an electric vehicle (Including both 4 wheeler and 2 wheeler).

Under Section 80EEB – deduction of interest payment on loan taken for the purchase of an Electric Vehicle whether used for personal or business purposes.


Who is Eligible to Claim Deduction U/s 80EEB?

Only Individuals are eligible to claim deduction under section 80EEB. In the provision, it is not stated that this benefit is only available to the resident individual, so in the absence of a specific provision, the deduction will be available to both resident and non-resident.


Amount of Deduction U/s 80EEB

The amount of deduction available:

The Actual Interest Payment on loan

OR

Rs. 1,50,000/

(Whichever is lower).


Conditions to Claim Deduction U/s 80EEB

An individual is eligible to claim deduction U/s 80EEB.

The loan must be taken from a financial institution or a non-banking financial company (NBFC)

The loan must be taken between 1-April-2019 to 31-March-2023

Loan must be taken for the purchase of an Electric vehicle.

The 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.


Frequenlty Asked Questions

What is the Meaning of Electric Vehicle?


It means a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by 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;


Meaning of Financial Institution


“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

Can HUF Claim deduction u/s 80EEB?


No, Only Individual eligible to claim deduction under section 80EEB.


I purchased Bajaj Chetak electric scooter, can I claim deduction under section 80EEB?

Yes, electric vehicle includes both (4 wheeler and 2 wheeler). Only interest payment on loan taken eligible for deduction


Whether principal repayment on loan taken is eligible for deduction under section 80EEB?


No, Only Interst payment is eligible to claim deduction under section 80EEB.


Is Loan Taken form Relative is eligible for deduction under section 80EEB?


No, Loan must be taken from a financial institution or a non-banking financial company (NBFC).

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