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In the union budget 2019, the government has announced an incentive for purchase electric vehicle. In the budget speech, the finance minister has stated that advanced battery and registered e-vehicles will be incentivised under the scheme. A new section 80EEB has been introduced allowing a deduction for interest paid on loan taken for the purchase of electric vehicles from the AY 2020-21.
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 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 of the return.
The union cabinet has approved Phase-II of FAME scheme for 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, the incentives are available for 3 Wheelers, 4 Wheelers and electric 2 wheelers. The Phase-II of the scheme has started from 1 April 2019 and will be completed by 31 March 2022. The Phase-II is an expanded version of the first phase. FAME India Phase II has a total outlay of Rs 10000 Crores over a period of 3 years from 1 April 2019 to 31 March 2022.
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