Income Tax

Deduction u/s 80EEB for interest on loan taken for purchase of electric vehicle

Deduction u/s 80EEB for interest on loan taken for purchase of electric vehicle

With a view to improve environment and to reduce vehicular pollution, the Union Budget 2019-20 has proposed to insert a new section 80EEB in the Income Tax Act so as to provide for a deduction in respect of interest on loan taken for purchase of an electric vehicle from any financial institution
up to one lakh fifty thousand rupees.

The deduction u/s 80EEB shall be subject to the following conditions:

(i) the loan has been sanctioned by a financial institution including a non-banking financial company during the period beginning on the 1st April, 2019 to 31st March, 2023;

(ii) the assessee does not own any other electric vehicle on the date of sanction of loan.

It is also proposed that where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-2021
and subsequent assessment years.

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