Remember to Claim Your Electric Vehicle Loan Interest Deduction!

Please heed this reminder...

If you took a loan to purchase an electric vehicle (EV), then you can claim a deduction from your income for the payment of interest you paid on such a loan.

You get this deduction under section 80EEB (of Income Tax Act, 1961).

Eligibility Criteria for Section 80EEB (of Income Tax Act, 1961) deduction:

1 You can claim the deduction if you are an individual.

Other taxpayers, such as a HUF, an AOP, a company, a partnership firm, cannot avail/claim the benefit of deduction under this section.

2 Quantum of Deduction under Section 80EEB (of Income Tax Act, 1961)

You can claim Rs1,50,000 (maximum) deduction under section 80EEB (of Income Tax Act, 1961) every year until your loan lasts.

So, if you pay ₹68,376 interest in a year, then you can claim ₹68,376 only.

And if you paid ₹2,32,322 interest in a year, then you can claim ₹1,50,000 only.

3 Conditions for availing Section 80EEB (of Income Tax Act, 1961) Deduction:

You should take loan from a financial institution – banking company, any bank or a Non-Banking Financial Companies (NBFCs), with the purpose of purchasing an electric vehicle (EV).

4 Loan Sanction Date:

Your FI must have sanctioned EV loan within the duration of 01-04-2019 to 31-03- 2023.

You will not get any tax benefit of section 80EEB (of Income Tax Act, 1961), if FI sanctions the after 31st March, 2023.

5 EV used for personal use.:

You can use the EV for personal use or for the business use.

So if you use EV for your personal purposes, you will still get section 80EEB (of Income Tax Act, 1961) interest deduction.

6 EV used for business:

If you purchased an electric vehicle for business use, then also you can claim a deduction under this section up to ₹1.50 Lac from your personal income.And if you paid interest over ₹1.50 lac then you can claim the excess as business expense.

For example: If you paid ₹2,32,232 interest, then you should claim ₹1,50,000 deduction under section 80EEB (of Income Tax Act, 1961) and claim business expense of the balance ₹82,232 in your business.

7 Documents:

You must get the interest-paid certificate from the FI.

You should keep the original EV purchase invoices and loan documents.

Moreover, if you claim deduction under section 80EEB (of Income Tax Act, 1961), then you cannot claim deduction of interest on such an EV loan under any other sections of the I. T. Act, 1961, for the same and subsequent assessment years.

So, remember to claim your rightful deduction under Section 80EEB (of Income Tax Act, 1961) when you file your income tax return. It's a great way to save on taxes while contributing to a greener environment.