Electric Vehicle: The central government offers tax deductions in addition to subsidies to encourage electric mobility. You may benefit from this reduction if you purchase an electric vehicle with a loan. A loan interest deduction for buying an electric car was proposed in the 2019 Budget. A new section 80EEB of the income tax code was added in response. Starting with the 2020–21 assessment year, the tax exemption rule will be in effect. Read on to learn more.
Tax benefits of buying an Electric Vehicle
Tax deductions of up to Rs 1.5 lakh are possible under Section 80EEB of the Income Tax Act for the interest paid on loans for electric vehicles. Individual taxpayers are the only ones who may deduct taxes under this clause. This exemption will not apply to other taxpayers. This implies that you will not benefit from the tax exemption on EV if you are a HUF, AOP, partnership firm, company, or any other type of taxpayer.
Conditions under this section
- For the purpose of purchasing an electric car, a loan must be obtained from a financial institution or non-banking financial company.
- The loan must be authorised at any point between April 1, 2019, and March 31, 2023.
- A vehicle that is solely powered by an electric motor whose traction energy is supplied solely by a traction battery installed in the vehicle and has an electric regenerative braking system that allows for the conversion of kinetic energy from the vehicle into electrical energy while braking is referred to as a “electric vehicle” in this definition.