Section 80EEB of Income Tax Act: Interest on Electric Vehicle

CA Piyush Agarwal | Last updated: 22 November 2021

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Quick Summary

Section 80EEB of the Income Tax Act, introduced in the Union Budget 2019, offers a tax deduction on interest paid for loans taken to purchase electric vehicles. This benefit is available from Assessment Year 2020-21 onwards and is specifically for individual taxpayers. The electric vehicle must be registered in the owner's name or their business enterprise.

In the union budget 2019, the government has announced an incentive for purchase electric vehicle. In the budget speech, the finance minister has stated that advanced battery and registered e-vehicles will be incentivized under the scheme. A new section 80EEB of Income Tax Act, 1961 has been introduced allowing a deduction for interest paid on loan taken for the purchase of electric vehicles from the AY 2020-21.

Section 80EEB: Tax Benefit on Electric Vehicle Loans

Section 80EEB - TAX BENEFITS on purchase of EVs. In order to be eligible to claim the tax benefit, the following conditions are to be fulfilled:

Condition

Note: This deduction is allowed for Individual taxpayers ONLY. However, if the individual runs a business (proprietorship firm) and the vehicle is used for the purpose of business, he/she can claim it as a business expense in their books irrespective of the amount. The vehicle has to be registered in the name of the owner or in the name of their business enterprise. In that case, the deduction of 1.5 lakh will not be eligible since that person is already claiming it as a business expense and you cannot claim the same expense twice.

Some other benefits of buying Electric vehicles

Benefits of buying Electric vehicles

Compiled by:
CA Ayush Agarwal & CA Piyush Agarwal

FAQ :

Section 80EEB is a provision introduced in the Union Budget 2019 that allows for a tax deduction on the interest paid on loans taken for the purchase of electric vehicles.

The deduction under Section 80EEB is available from the Assessment Year 2020-21.

This deduction is exclusively for individual taxpayers.

If an individual runs a business (proprietorship) and the electric vehicle is used for business purposes, they can claim it as a business expense. However, they cannot claim the Section 80EEB deduction as well, as it would be claiming the same expense twice.

The electric vehicle must be registered in the name of the owner or their business enterprise to be eligible for the tax benefit.