The central government also provides tax deductions on electric vehicles in addition to subsidy to promote electric mobility. If you buy an electric car by taking a loan, you can take advantage of this discount.
In Budget 2019, it was propose to give a deduction on the interest of the loan on the purchase of an electric car.
A new section 80EEB (section 80EEB) was introduce in the income tax.
The rule of tax exemption is applicable from the assessment year 2020-21.
Under Section 80EEB of Income Tax, a tax deduction up to Rs 1.5 lakh is available on the interest amount on loan for an electric vehicle.
This exemption will be available on electric cars for both personal and business use.
Tax deduction under this section is only for the individual taxpayer, other taxpayers will not get the benefit of this exemption.
This means that if you are a HUF, AOP, partnership firm, company or any other type of taxpayer, you will not get the benefit of tax exemption on EV.
This tax exemption is available only once under section 80EEB of Income Tax.
A buyer can take advantage of this tax exemption only on the purchase of an electric car for the first time.
Tax exemption will be available to the buyer who has taken a loan from a financial institution or a non-banking financial company.
There is a deduction of Rs 1.5 lakh on the interest of the loan.
As per the tax rules, electric vehicle loans for tax deduction should be sanction between 1st April, 2019, to 31st March, 2023.
That is, from the financial year 2020-21 onwards, you can take advantage of tax deduction under section 80EEB.
And also keep in mind that the individual taxpayer should get the interest certificate from the financial institution.
Other important documents such as tax invoice and loan documents should be kept ready while filing the income tax return.
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