To promote electric mobility, the central government also offers tax deductions on electric vehicles in addition to the subsidy. If you buy an electric car with a loan, you can take advantage of this discount.
In the 2019 budget, it was proposed to grant a deduction on loan interest on the purchase of an electric car. To do this, a new section 80EEB (section 80EEB) has been introduced in the income tax. The tax exemption rule is applicable from the 2020-21 assessment year.
Under Section 80EEB of the income tax, a tax deduction of up to Rs 1.5 lakh is available on the loan interest amount for an electric vehicle. This exemption will be available on electric cars for personal and commercial use. The tax deduction under this section is only for the individual taxpayer, other taxpayers will not benefit from this exemption. This means that if you are a HUF, AOP, a partnership firm, a company or any other type of taxpayer, you will not benefit from the electric vehicle tax exemption.
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In addition, this tax exemption is only available once under Section 80EEB of income tax. In other words, a buyer can only benefit from this tax exemption when purchasing an electric car for the first time. Tax exemption will be available to the purchaser who has obtained a loan from a financial institution or a non-banking financial company. There is a deduction of Rs 1.5 lakh on the loan interest.
According to tax regulations, loans for electric vehicles with tax deduction must be sanctioned between April 1, 2019 and March 31, 2023. That is, from fiscal year 2020-21 onwards, you can benefit of the tax deduction according to section 80EEB.
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Note that the individual taxpayer must obtain the interest certificate from the financial institution. Along with this, other important documents such as tax invoice and loan documents should be kept ready while filing the income tax return.
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