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 incentivized under the scheme. A new section 80EEB of Income Tax Act, 1961 has been introduced allowing a deduction for interest paid on loan taken for the purchase of electric vehicles from the AY 2020-21.
Section 80EEB – TAX BENEFITS on purchase of EVs. In order to be eligible to claim the tax benefit, the following conditions are to be fulfilled: –
Note: This deduction is allowed for Individual taxpayers ONLY. However, if the individual runs a business (proprietorship firm) and the vehicle is used for the purpose of business, he/she can claim it as a business expense in their books irrespective of the amount. The vehicle has to be registered in the name of the owner or in the name of their business enterprise. In that case, the deduction of 1.5 lakh will not be eligible since that person is already claiming it as a business expense and you cannot claim the same expense twice.
Some other benefits of buying Electric vehicles: –