Section 80EEB – Buy Electrical Vehicle and save Tax

 

The Finance Act, 2019 has inserted a new Section 80EEB which provides tax benefits to assesses buying the Electrical Vehicles.

The interest paid on loans borrowed for purchasing the Electrical Vehicles shall be deducted while computing the Total Income of the assessee.

The eligibility, amount of deductions and conditions for availing the tax benefit is discussed in this article.

 

1)     Who is eligible to claim the deduction?

The deduction under this section can be claimed by an assessee being an individual.

So the deduction under this section cannot be availed by assessees being HUFs, Partnership Firms, Companies, AOPs, BOIs, or any other types of assessees.

While the deduction under this section can be claimed by individual assessees only, the other assessees can also claim the deduction for interest paid/ payable under section 36(1)(iii) provided, they are deriving income from business and profession.

 

2)     What is the amount of deduction allowed?

Interest paid or payable to the maximum of Rs. 1,50,000/- per annum can be deducted from the Total Income.

If the interest paid or payable is more than 1,50,000/- per annum, then such excess amount can be claimed u/s 36(1)(iii) provided the assessee is deriving income from business and profession.

 

3)     Other conditions for availing the deduction under this section.

a)     The loan should have been taken between 01-04-2019 to 31-03-2023.

b)     Loans are taken by banks and or banking institutions including NBFCs.

c)    Only interest is allowed as a deduction. So, no deduction will be given on the principal amount of the loan repaid.

 

 

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CA Sanjay R Shetty

+91 77602 52581