Buying EV on loan? Here's how you can save tax
What's the story
The Indian government offers tax deduction under Section 80EEB of the Income Tax Act (ITA) for interest paid on loans taken to buy electric vehicles (EVs). The benefit is applicable under the old tax regime and can go up to ₹1.5 lakh in a financial year. This initiative was launched by the Centre to promote EV adoption in India and boost the sector among common people.
Qualification requirements
Eligibility for claiming tax benefit under Section 80EEB
To avail this tax benefit, the loan must have been sanctioned between January 1, 2019, and March 31, 2023. The deduction is only available to individual taxpayers under the old tax regime. Other entities like Hindu Undivided Family (HUF), firms, partnerships or companies, associations of persons (AOP) are not eligible for this EV-related tax benefit under Section 80EEB of ITA.
Deduction details
Key points to remember while availing tax benefit
The tax benefit is a one-time rebate and cannot be claimed for multiple EV purchases. It can be claimed against a loan taken for buying an electric vehicle by a salaried taxpayer for personal use. The deduction also applies to business use of an EV, provided the purchaser and taxpayer is a salaried individual. To claim this deduction, you need to provide the interest-paid certificate along with other documents when filing your income-tax returns (ITR).
Claim conditions
What is considered an EV?
The loan must be specifically for buying an EV from a bank, financial institution, or NBFC. The term 'EV' refers to vehicles that are fully powered by an electric motor and traction battery system. It also includes those with an electric regenerative braking system that converts vehicle kinetic energy into electrical energy during braking.