You can reduce tax simply by buying an electric car

India is leading the fight against climate change with electric vehicles. At COP26, India pledged to cut carbon emissions by 1 billion tonnes per year by 2030 and increase the proportion of renewables to half. The government must intervene in the EV market to reach this goal. Tax savings is one such incentive.

Under the new section 80EEB, the tax deductions incentive was created during the Budget Session 2019. This offered tax benefits for registered buyers of electric vehicles.

What does section 80EEB mean?

Buyers who finance their vehicles from an approved financial institution can enjoy a tax exemption up to Rs 150,000 under the new section 80EEB. This exemption applies to interest on any loan amount. This exemption will apply to all four-wheelers as well as two-wheelers.

Conditions

The exemptions are only available for individuals, and will not be granted to any entity or organization.

The loan must be approved by the financial institution within the time period between 1 April 2019 and 31 March 2023.

-The financial institution must approve the loan. Here, “financial institutions” refers to any banking firm to whom the Banking Regulation Act of 1949 (10 of 49) applies or any bank/bank institution that is referred to under section 51.

– Second-time EV purchasers will not be eligible for the exemption. The exemption can only be applied for by the original owners.

All documents required by ITR filings should be kept in order of the buyer’s submission, including the tax invoice and interest paid certificate.

FAME has allowed manufacturers to offer lower prices to end consumers than ICE. This in addition to tax incentives. To further lower the price, the central government has asked state governments to offer subsidies for electric vehicle purchasers.