India continues to promote the shift to more sustainable and green mobility by imposing supportive policies and incentives for electric vehicle purchases, including Section 80EEB of the Income Tax Act.
What is Section 80EEB?
Section 80EEB of the Income Tax Act of 1961 is basically a tax incentive for individuals buying electric vehicles through a loan. It offers customers an interest payment deduction of up to INR 150,000 on electric vehicle loans, regardless if it is for personal or business purposes.
However, the electric vehicle must have the owner or the business enterprise’s name in the registration documents to claim the tax incentives as a business expense. It must also exceed Rs 1,50,000 in interest payments.
It does not only include four-wheelers but also two and three-wheeler electric vehicles, offering prospective buyers a wide range of choices.
According to Tax2win, the Indian government introduced Section 80EEB in the budget 2019 to boost electric vehicle demand in the country.
Qualifications
Individual taxpayers can benefit from the tax benefits under Section 80EEB as long as they qualify for the following standards:
| Conditions | |
| Loan source | Businesses need to secure loans for the acquisition of electric vehicles from either financial institutions or non-banking financial organizations. |
| Approval timeline | The loan approval must fall within the period between April 1, 2019, and March 31, 2023. |
| Vehicle specifications | The electric vehicle must meet the definition specified in the Income Tax Act, 1961, being exclusively powered by an electric motor with a traction battery and a regenerative braking system. |
Availability
Unfortunately, the Indian government already closed the applications for assessment year (AY) 2023-2024. Nonetheless, ClearTax stated that filing for this 2024-2025 will soon open. Interested applicants better watch out.
It must also be noted that individual taxpayers must acquire the interest-paid certificate and maintain the tax invoices and loan documents for the time of filing the return.
