Are there any tax advantages to financing the purchase of an electric vehicle? Yes, in order to encourage the use of electric vehicles, the government created this new Section 80EEB, under which the loan obtained to buy an electric car can be written off much like the interest on a mortgage.
Beginning with the assessment year 2020–21, Section 80EEB will be added. The deduction is allowable under this provision if the following requirements are met.
What is the maximum tax deduction allowed by Section 80EEB?
A person may use Section 80EEB to deduct expenses if the aforementioned requirements are met. The deduction is applicable to the lesser of Rs. 1,50,000 or the interest due on the aforementioned loan. The deduction is available beginning with FY 2019–20 and following assessment years, as I noted previously.
Keep in mind that you cannot deduct the same interest twice. Interest that has once been claimed as a deduction under section 80EEB is not eligible to be claimed again for the same or any subsequent assessment years under any other provision of the act.
When submitting your taxes, you must receive the interest paid certificate and have the relevant paperwork on hand, including tax invoices and loan documentation.
Based on the facts provided above, we must conclude that as of right now, only loans approved for FY 2019–20 to FY 2022–23 are eligible for the tax advantage. However, as tax benefits on such loans can be claimed up to the loan’s conclusion, there is no constraint on how long the loan should last.
