Tax incentive for electric vehicles

With a view to improve environment and to reduce vehicular pollution, it is proposed to insert a new section 80EEB in the Act so as to provide for a deduction in respect of interest on loan taken for purchase of an electric vehicle from any financial institution up to one lakh fifty thousand rupees subject to the following conditions:

(i) the loan has been sanctioned by a financial institution including a non-banking financial company during the period beginning on the 1st April, 2019 to 31st March, 2023;

(ii) the assessee does not own any other electric vehicle on the date of sanction of loan.

It is also proposed that where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-2021 and subsequent assessment years.

[Clause 25]

 

 

 

Deduction for electric vehicle loan interest allowed subject to sanctioned-loan period and sole-ownership condition under new tax provision. Section 80EEB permits a deduction for interest on loans taken to purchase an electric vehicle where the loan is sanctioned by a financial institution (including NBFCs) within the prescribed sanction period and where the borrower does not own any other electric vehicle at loan sanction; the same interest cannot be claimed under any other provision for the same or any other assessment year and the amendment applies from the stated commencement to the relevant assessment years.