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This is a newly inserted section in budget 2019 where in government has introduced a tax benefit in case of purchase of electric vehicles. The purpose behind the incentive is to encourage the people of India to shift from Non- Electric vehicle to Electric Vehicles.
Under this section, deduction of interest payment on loan taken to purchase Electric Vehicle shall be available whether for person or business purpose. The deduction under this section would be available till the repayment of loan.
Deduction u/s 80EEB is available for 4 wheeled vehicles and also for 2 wheeled vehicles
The amount of deduction available under this section is given below :
Actual interest payment on loan or
Rs. 1,50,000/-
(whichever is lower)
Only individuals are eligible to claim deduction under section 80EEB. One question may come in your mind whether non - resident also cover under this section ? Well, in the absence of specific provision, deduction under section 80EEB will be available to both resident and non-resident individuals.
Let’s under the meaning of some important terms used above :
A vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy.
Example : Given below is the information
A taken a loan to purchase electric vehicle |
Loan taken during FY 2019-20 |
Total interest payment during the year Rs. 2,00,000/- |
Loan taken from a relative |
In the above case, no deduction of interest shall be allowed since loan was taken from the relative.
However, in the above case if loan would have been taken from a financial institution then total deduction under section 80EEB shall be Rs. 1,50,000/-Deduction under this section shall be available until repayment of loan provided other conditions satisfied.
Since the law is not very clear but as per our opinion if you are making payment of interest then you can claim a deduction under this section.
You must have received an interest certificate from the bank that you can submit. However, provisional interest certificate can also be submitted as evidence to claim deduction.
Only individuals can claim the deduction under this section. HUF is not eligible to claim the deduction.
No, only deduction in respect of interest payment is available under this section.
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