Loaned for your electric vehicle? Section 80EEB lets you drive tax benefits home

Drive tax smart: Have you taken a loan to purchase an electric vehicle? Under Section 80EEB, you can claim a deduction for interest payments up to Rs 1,50,000. This deduction is applicable for loans sanctioned between January 1, 2019, and March 31, 2023.

Tax clarity: Nuts and bolts of 80EEB

To avail of the tax deduction, the loan must be obtained from a financial institution or a non-banking financial company, and the electric vehicle must be exclusively powered by an electric motor with traction energy supplied by a traction battery. Additionally, the vehicle must feature an electric regenerative braking system.

For individuals using EVs for business purposes, any interest payments above Rs 1,50,000 can be claimed as a business expense, provided the vehicle is registered in the name of the owner or the business enterprise.

EVs ride affordability wave

Beyond Section 80EEB, the government has introduced several other tax benefits to boost the EV ecosystem. The GST rate for EVs has been reduced from 12 per cent to 5 per cent, making them more accessible to consumers. Additionally, EVs are exempt from green tax when renewing their registration certificates after 15 years, providing further financial relief to EV owners.

Notably, electric vehicles do not require the pollution control certificate (PUC) mandatory for traditional petrol and diesel vehicles.

States fuel green shift

Several state governments are actively participating in the promotion of electric vehicles. For instance, Tamil Nadu has announced a 100 per cent exemption of motor vehicle tax on EVs registered in the state between January 1, 2023, and December 31, 2025.

Furthermore, the Delhi government, under its Electric Vehicle Policy, has waived road tax for two- and four-wheeler electric vehicles, aligning with the broader national goal of reducing vehicular emissions.