TAX DEDUCTION ON INTEREST PAID ON LOAN FOR PURCHASE OF ELECTRIC VEHICLE
Under Section 80EEB, a tax deduction up to Rs.1.5 lakh is allowed for the interest paid on the loan availed to purchase an electric vehicle. This deduction is an attractive proposition for individuals to choose electric vehicles as their next vehicle purchase. The deduction is available for both four-wheeler and two-wheeler electric vehicles. Section 80EEB deduction is eligible subject to the following conditions. Deduction under this Section is available only to individuals and not businesses. The deduction is applicable for the interest component paid on loan availed to purchase electric vehicles. The maximum deduction allowed is up to Rs.1.5 lakh. The electric vehicle (EV) should be bought on loan from a bank or a Non-Banking Financial Company (NBFCs). The deduction will be allowed for the loan sanctioned between the 1st of April 2019 and the 31st of March 2023. Apart from this, the government has reduced the Goods and Services Tax (GST) rate on EVs from 12% to 5%. Also, some states have exempted EVs from road tax and registration. Other state governments are also considering and might waive road tax on EVs. Additionally, the government has exempted EVs from the ‘green tax’ introduced recently in Budget 2021.
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