Income tax Exemption on Electric Vehicle (U/s 80EEB)

Income tax Exemption on Electric Vehicle  (U/s 80EEB)

The central government has announced an incentive for purchasing an electric vehicle in the 2019 Union Budget. The Finance Minister has announced that Registered Electric Vehicle and Advance battery come under this Scheme. Section 80EEB is introduced for deduction for INTEREST on Loan taken for Purchase of Electric Vehicles from the Assessment year 2020-2021 till Assessment year 2022-2023. The aim of the Government is to introduce a section that is to control pollution by encouraging environmentally-friendly transportation.

Vehicle under this Section means:

“vehicle that is powered solely by an electric motor and whose traction energy is supplied solely by a traction battery installed in the vehicle, as well as a vehicle that has an electric regenerative braking system that converts vehicle kinetic energy into electrical energy while braking.”

Condition for Claiming the Deduction on Electric Vehicle  (U/s 80EEB):

• The Deduction under this section is ONLY for Individual Taxpayers.
• A loan should be taken ONLY for Electric Vehicle.
• The Loan should be taken from a financial Institution or Non- Banking Financial Company (NBFC).
• The deduction can be claim ONLY from Interest
• The Loan Sanction Period should be ANYTIME between from Assessment Year 2020-21till Assessment year 2022-2023.
• The Claim for the Deduction under this section shall not exceed Rs 1, 50,000.

Note:

The deduction is for Individual Taxpayer only but if the Individual engages in business (proprietorship firm) and the EV (electric vehicle) is used for his/her business purpose, she/he can Claim it as Business expenses in the books of Account of Owner. EV should be registered in the name of the Owner of the business and has to keep all necessary loan documents should be handy at the time of filing returns.

However, in this case, the Individual shall not eligible for claim deduction under section 80EEB as you can’t claim the same expense twice.

Some of the benefits of buying Electric Vehicles are as follows:

Tax Benefits:

Individual Taxpayer can Claim deduction as Under Sector 80EEB on the Interest on Loan taken for Electric vehicle from Banking Institute or NBFC Or can show as Business expenses in the book of Account of the Owner.

GST rate:

The government has reduced the GST rate from 12% to 5% on Electric Vehicles.

Green Tax:

Under green Tax Vehicle would be Charge Tax at the time of renewable of registration Certificate after every 15year. But Electric vehicles would be completely exempt from Green Tax.

Reduce Cost:

Completely no petrol and Fuel is required for Electric Vehicle.

Low Maintenance Cost:

Electric Vehicle required very low maintenances as compared to traditional vehicles this is because traditional vehicles required almost 100 moving parts and whereas Electric Vehicle has around 20 parts.

Pollution Control:

It is more environmentally friendly as compare to traditional motors

Some of the disadvantages of buying Electric Vehicles are as follows:     

Long recharge Time:

Electric Vehicle required 6-10 hours for a full charge. So, be well plan in case you plan for long journey.

Limited Range:

Generally, EV has a usable range of 400-450 kilometres from 100% charge battery.

Charging Station:

Currently, it’s very difficult to find a charging station for electric vehicles. But this might not be a longer issue as Government has introduced this section. Hence they will establish proper infrastructure for an electric vehicle.

Replacement of Battery:

Most of Electric vehicles have 5-8 years of warranty for their Battery life.

Here is a list of some of the electric vehicles that are currently available in the Indian market:

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