Finance Minister Nirmala Sitharaman made the statement during the presentation of the Union Budget 2023, making electric cars (EVs) more affordable in India by extending battery subsidies for another year.
Section 80EEB of the Income Tax Act allows you to claim tax savings of up to Rs 1.5 lakh on interest paid on a loan made specifically to purchase an electric car. However, certain restrictions and conditions concerning the loan issuer and the electric vehicle must be followed in order to claim the 80EEB deduction.
You can claim tax deduction benefits only if the loan is approved between 1 January 2019 and 31 March 2023.
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.
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 a deduction of 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 invoices and loan documents handy at the time of filing the return.
The union cabinet has approved Phase-II of the FAME scheme for the promotion of electric mobility in the country. The FAME (Faster Adoption and Manufacturing of Electric Vehicles) is an incentive scheme of the government of India for the promotion of electric and hybrid vehicles in the country.
The ultimate objective of the scheme is to promote electric mobility and the scheme offers financial incentives for the purchase of electric vehicles and the creation of electric transportation and charging infrastructure.
Under the scheme, incentives are available for 3-wheelers, 4-wheelers and electric 2-wheelers. The Phase II of the scheme started on 1 April 2019 and will be completed by 31 March 2022. Phase II is an expanded version of the first phase. FAME India Phase II has a total outlay of Rs 10,000 crores over a period of 3 years from 1 April 2019 to 31 March 2022.
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