Who can claim a deduction u/s 80EEB?

The deduction under this section is available only to individuals. This deduction is not available to any other taxpayer. Thus, if you are a HUF, AOP, Partnership firm, a company, or any other kind of taxpayer, you cannot claim any benefit under this section.

Amount of deduction

A deduction for interest payments up to Rs 1,50,000 is available under Section 80EEB. An individual taxpayer may have an electric vehicle for personal use or for business use. This deduction would facilitate individuals having an electric vehicle for personal use to claim the interest paid on the vehicle loan.

In case of business use, an individual can also claim the deduction up to Rs 1,50,000 under section 80EEB. Any interest payments above Rs 1,50,000 can be claimed as a business expense. To claim as a business expense, it is necessary that the vehicle should be registered in the name of the owner or the business enterprise.

Do note that an individual taxpayer should obtain the interest paid certificate and keep the necessary documents such as tax invoice and loan documents handy at the time of filing the return.

Conditions for claiming the deduction

1. The loan must be taken from a financial institution or a non-banking financial company for buying an electric vehicle.
2. The loan must be sanctioned anytime during the period starting from 1 April 2019 till 31 March 2023.
3. As per the Section 80EEB, an Electric Vehicle refers to a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery which is installed in the vehicle and has such electric regenerative braking system, which upon during braking provides for the conversion of vehicles kinetic energy into electrical energy.
4. Once the deduction concerning the interest amount has been claimed under Section 80EEB, no further deduction can be claimed for such interest payment under any other provisions of the Act for the same or any other assessment year. 
   
   Note: The deduction can be claimed from the AY 2020-21 onwards.