According to Union Budget 2019, the government announced tax incentives for purchasing EVs. The government also said that all registered vehicles fall under the scheme. In fact, Section 80EEB of income tax was also introduced to offer tax benefits on EVs.
What is this section about?
Section 80EEB of income tax allows a deduction on interest paid on a loan taken for the purchase of EVs. According to this section, if you buy an electric vehicle, you can get tax deductions of up to Rs 1.5 lakh on interest paid on the loan amount on the acquisition of an electric vehicle.
“The deduction is available for both personal and/or business purposes. The deduction under this section would be available till the repayment of the loan,” said CA Ruchika Bhagat, MD, Neeraj Bhagat & Co while talking to CNBC-TV18.com.
One must understand that the deduction applies to only on interest paid and not on principal loan amount payment.
What is the eligibility criteria for the same?
This deduction is only available for individuals.
Thus, if you are a HUF, AOP, partnership firm, company, or any other kind of taxpayer, you cannot claim any benefit under this section.
How to avail benefits?
Individual taxpayers should obtain the interest paid certificate and keep the necessary documents such as tax invoices and loan documents handy at the time of filing of income tax return (ITR), according to Clear.
To claim as a business expense, it is necessary that the vehicle should be registered in the name of the owner or the business enterprise.
What are the conditions for claiming the deduction?
The loan must be taken from a financial institution or a non-banking financial company for buying an electric vehicle and must be sanctioned anytime during the period starting from April 1, 2019 and March 31, 2023.
Rising petrol and other fuel prices have contributed to many customers’ desire to switch to electric vehicles. EVs are not only cost-effective, but also offers tax benefits. Read on to understand further