Under Section 80EEB, taxpayers can claim deductions on the interest amount paid for EV loans.
The Government of India offers many incentives to boost electric mobility, such as the deduction available under Section 80EEB of the Income Tax, 1961. Under this provision, you can get tax benefits on the interest paid on Electric Vehicle (EV) loans. This is applicable to both two-wheelers and four-wheelers for personal or business use.
The Section 80EEB deduction limit is ₹1.5 Lakhs, and it is applicable until the entire loan is repaid. This deduction can help lower your tax liability; however, there are some prerequisites you must meet.
Here is what you need to know about claiming the Section 80EEB deduction:
1. Loan Amount Limit
The deduction is available on loans sanctioned on or after April 1, 2019, but not later than March 31, 2023.
2. Vehicle Type
The deduction is applicable only for loans taken to purchase electric vehicles.
3. Ownership
The taxpayer must be the owner of the electric vehicle for which the loan is taken to be eligible for the deduction.
4. Lender
A loan must be secured from a financial institution or non-banking financial organisation and utilised to purchase an electric vehicle.
5. First-time Buyer
The individual must be a first-time EV buyer and the vehicle must meet the definition of an electric vehicle.
Remember, the interest claimed as an 80EEB deduction cannot be used under any other section. The definition of an electric vehicle can be summed up in the following way:
A vehicle that is powered by an electric motor for which the traction energy is supplied by a traction battery
The battery needs to be installed in the vehicle
- The vehicle needs to have an electric regenerative braking system
One key Section 80EEB eligibility criterion is that it is available only for individuals. As a result, the provisions of this section cannot be used by the following taxpayers:
Associations of Persons
Firms
Companies
Limited liability partnerships
Hindu Undivided Families
Frequently Asked Questions
For how many years can I claim the Section 80EEB deductions?
You can claim the interest deduction of your EV loan u/s 80EEB until the loan is fully repaid.
What documentation should I provide to get Section 80EEB benefits?
You must submit the interest certificate obtained from the lender. Provisional interest certificates may also be presented as evidence to back up a deduction claim.
Can a HUF make the Section 80EEB deduction?
No, as per the provisions of the section, only individuals can claim the deduction.
Does Section 80EEB allow a tax deduction for the repayment of loan principal?
No, this provision only permits a deduction for interest payments.
Is Section 80EEB still applicable?
You can claim a deduction under this section until you repay your EV loan sanctioned between April 1, 2019 and March 31, 2023.
Can I claim section 80C and 80EEB deductions?
Yes, the deductions offered under both these sections are exclusive. However, you cannot interchange the deductions. For instance, the interest on an EV loan cannot be claimed under 80C.
What are the benefits of EV car loans?
One benefit of purchasing an electric vehicle on loan is that you can claim 80EEB deductions for the interest you pay on it. The deduction is available until the loan is repaid in full.
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