The world has started moving towards sustainable living which has given rise to the use of electric vehicles in daily life. The government, in a bid to promote the transition to renewable resources, has provided taxpayers with the option to avail tax deductions on the interest they pay for a loan taken for the purchase of an electric vehicle under Section 80EEB.
As specified under this section, a taxpayer is allowed a deduction for interest paid on the loan amount taken for the purchase of an Electric Vehicle (EV), whether it is done for personal usage or regarding any business purposes. A taxpayer can avail deduction under this section till the loan is repaid.
Individuals can avail a deduction amount of up to Rs 1,50,000 per annum on payment of interest on a loan secured on purchasing an EV. Any interest paid above Rs 1,50,000 can be claimed as a business expense provided the vehicle is registered in the name of the owner or the business enterprise. It is also mandatory for individuals to have an interest paid certificate and also have possession of important documents such as tax invoice and loan documents when they are filing the income tax return.
Conditions to claiming Tax Deductions under Section 80EEB:
- The loan which is taken by a taxpayer must be sanctioned from a financial institution or a non-banking financial company.
- The loan should be sanctioned anytime during the period starting from April 1, 2019 till March 31, 2023.
This can be seen as a step towards promotion of electric vehicles in the country by the government, which might be helpful in combating environmental issues prevailing especially in the metro cities of India. For assistance with filing your income tax returns, visit us at All India ITR or download our ITR filing mobile app.