Electric vehicles are not only cost-effective, but they also come with tax benefits in India. Due to the fact that non-electric automobiles for personal use are deemed luxury goods under Indian tax legislation, salaried professionals do not qualify for any tax breaks on auto loans. However, the Indian government has introduced a new provision that exempts EV owners from paying taxes, in order to boost the usage of electric cars in the country. The code for this section is 80EEB. Salaried professionals can take advantage of tax savings when purchasing an electric vehicle under this clause. This might persuade paid workers to consider an EV as a feasible alternative for their next car.
Tax Benefits for buying EVs
Section 80EEB allows for a total tax exemption of up to Rs 1,50,000 when paying off an EV loan. This tax credit is valid for both four-wheeled and two-wheeled electric vehicles.
Criteria for Eligibility
Individuals are the only ones who can benefit from this tax break. This deduction is not available to any other taxpayer. As a result, if you are a HUF(Hindu Undivided Family)
, AOP(Association of Persons), Partnership business, corporation, or any other form of taxpayer, you cannot claim any benefit under this provision.
The conditions that apply to Section 80EEB are listed below-
Each person is only eligible for this exemption once. This implies that Section 80EEB loan tax reduction is only available to those who have never owned an electric car previously.
Only those who are financing an electric car are eligible for this exemption. A loan from a financial institution or a non-banking financial firm should be used to fund the EV (NBFC).
The clause allows for tax savings on EV loan repayments made between April 1, 2019 and March 31, 2023.
Tax incentives under Section 80EEB will be available beginning in FY 2020-2021
Under Section 80EEB, anyone who opt to buy an EV on loan would be entitled for a tax deduction of Rs 1.5 lakh on the interest paid on the loan amount. For paid professionals, the tax savings make purchasing an electric car as their next vehicle a viable option.
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