EligibilityThe deduction under section 80EEB is only available to an individual assessee. Therefore, any other assessee, be it a company, HUF, partnership firm, etc., is not eligible to claim a deduction under the said section.
Conditions to claim the deduction
- The taxpayer must be a first-time buyer of electric vehicles.
- The taxpayer must have taken a loan for the purchase of an electric vehicle.
- The loan must be taken from a financial institution (i.e. a bank or an NBFC).
- The loan must be sanctioned between April 1st, 2019 and March 31st, 2023.
Amount of Deduction availableA taxpayer can claim a deduction for interest paid to a financial institution in a calendar year up to Rs. 1.50 lakhs per annum. An individual taxpayer can purchase an EV for both personal use and/or business use.
If an EV is used for business purposes and an individual has already claimed a deduction u/s 80EEB of Rs. 150,000, then he can claim the expense of interest paid over and above Rs. 150,000 as a business expense.
A taxpayer must obtain an interest paid certificate from the financial institution for income tax return filing purposes.
IllustrationLet us understand the provisions of Section 80EEB with following illustrations-
|Particulars||Mr. Manish||Ms. Anjali|
|Occupation||Businessman||Salaried IT Professional|
|Loan taken for purchasing EV||Rs.25 Lakhs||Rs.18 Lakhs|
|Loan taken from||NBFC||Employer|
|Loan sanction date||15.06.2020||18.08.2020|
|Loan disbursed on||15.07.2020||7.09.2020|
|Purpose||Purchase of EV for personal and business use||Purchase of EV for personal use|
|Cost of EV||Rs.30 Lakhs||Rs.22 Lakhs|
|Interest Rate||10.5% p.a||8% p.a.|
|Whether taxpayer can claim deduction u/s 80EEB||YES||NO|
|If No, why||N.A.||The taxpayer has not taken loan from a financial institution as defined under the section.|
|Quantum of Deduction||Interest paid Or Rs. 150,000 Whichever is lower.||Nil|