The deduction can be availed only on the first EV loan.
Union Budget 2021: The trend of electric vehicle (EV) is gradually increasing in the country. In view of this, car companies are also giving electric cars a place in their portfolio. Renowned electric vehicle company Tesla is going to bring the product to the Indian market from this year. In order to promote the purchase of electric vehicles in the country, the government also announced tax deduction of up to Rs 1.5 lakh on the interest of EV loan in the year 2019.
Now many citizens want to increase this limit. This thing has come out from a Twitter poll. Financial Express Online Hindi had sought a readers’ opinion on raising the tax deduction limit on the interest of EV loan through a Twitter poll. For this, he was asked the question, ‘A tax deduction of up to Rs 1.5 lakh can be claimed on the interest paid on taking a loan for the purchase of electric vehicle sold in the budget 2019. Should the government increase this limit in Budget 2021?
85 per cent of the participants in this poll answered yes to the question. At the same time, 5 per cent of the participants answered ‘No’ and 10 per cent opted for ‘No interest in EV purchase’.
What is the provision for a tax deduction on EV
In the Budget 2019, it was announced to claim a tax deduction of up to Rs 1.5 lakh on the interest paid on taking a loan to buy an electric vehicle (EV). The claim for a new tax deduction on the interest of EV loan can be made from April 1, 2020, under section 80EEB of the Income Tax Act. For this, this loan should be taken between 1 April 2019 to 31 March 2023. Also, there is a condition that deduction can be availed only on the first EV loan.
Only individual taxpayers can benefit
According to the Clear Tax, the benefit of tax deduction under section 80EEB is only for individuals and not for other taxpayers. That is, Hindu Undivided Family (HUF), AOP (Association of Persons), Partnership Firm, Company or any other taxpayer cannot claim this deduction. An individual taxpayer can purchase the electric vehicle for personal or business use.