Incentive on Purchase of Electric Vehicle on Loan

GOOD NEWS FOR ASSESSEE WHO HAD OR PLANNING TO PURCHASE ELECTRIC VEHICLE ON LOAN

To encourage the purchase of ‘electric vehicle’, Govt of India had come with new incentive plan .In the union budget 2019, the government has announced an incentive for purchase electric vehicle. In the budget speech, the finance minister has stated that advanced battery and registered e-vehicles will be incentivised under the scheme. A new section 80EEB has been introduced allowing a deduction for interest paid on loan taken for the purchase of electric vehicles from the AY 2020-21 onwards.

Electric vehicle (EV), also called electrics is a vehicle that uses one or more electric motors or traction motors for propulsion. An electric vehicle may be powered through a collector system by electricity from off-vehicle sources, or may be self-contained with a battery, solar panels, fuel cells or an electric generator to convert fuel to electricity. EVs include, but are not limited to, road and rail vehicles, surface and underwater vessels, electric aircraft and electric spacecraft.

Deduction under section 80EEB is available if the following conditions are satisfied-

1. The assessee is an individual.

2. He has taken a loan for the purpose of purchase of an electric vehicle

3. Loan is taken for financial institution (ie Bank and Specified NBFC).

4. Loan sanctioned during April 1, 2019 to March 31,2023.

‘financial institution’ has been defined under section 80EEB (5) (b) which means –

• A banking company to which the Banking Regulation Act applies; or
• Any bank or banking institution referred to in section 51 of the Banking Regulation Act.
• The term includes any deposits taking the NBFC or a systematically important non-deposit taking the non-banking financial company as defined under Explanation 4 (e) and (g) to section 43B.

Quantum of deduction will be Rs. 1,50,000/- or interest payable on the loan whichever is lower.Interest allowed as deduction u/s 80EEB will not be allowed as deduction under any other provision of the Act for the same or any other assessment.

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