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Section 80 EEB – Tax Exemption on Purchase of Electric Vehicles

By gkkedia Dt. February 18th, 2021

The Government of India introduced a new section 80EEB to promote electric vehicles as a measure to combat pollution in the Union Budget of 2019. It provides an incentive for the purchase of an electric vehicle by allowing deduction for interest paid on the amount of loan taken for the purchase of electric vehicle for the assessment year beginning on the 1st day of April, 2020.

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.

Deduction
This section allows the deduction of one lakh and fifty thousand rupees per annum as interest on loan for the purchase of electric vehicle and shall be allowed in computing the total income of the individual for the assessment year beginning on 1st day of April, 2020. The maximum amount of deduction available under this Section is Rs 1,50,000 per annum.

Conditions for claiming deduction

  • The deduction is available only to the individuals and cannot be availed by any other taxpayers like firm, HUF, AOP, company etc.
  • The loan should be sanctioned any time during the period starting from April 1, 2019, until March 31, 2023.
  • In the absence of any specification, the deduction under Section 80EEB is available to both the residents as well as a non-resident individual.
  • Once the deduction has been claimed under Section 80EEB, no further deduction can be claimed for such interest payment under any other provisions of the Act or any other assessment year.

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