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Tax Benefits of buying an electric car

Updated: Aug 26, 2021

What is Electric Vehicle?

An electric vehicle (EV]) is a vehicle that uses one or more electric motors for movement. An electric vehicle is generally powered by battery as a primary sources but new technology are solar panels, fuel cells or an electric generator to convert fuel to electricity

Benefits of using an electric car

  1. Lower Running Cost

  2. Easy to drive ( Due to Auto pilot feature )

  3. More Environment friendly

  4. Low Maintenance

Interest deduction under Income tax

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.

Eligibility criteria

Only Individual who has taken a Loan for purchase of an Electrical Vehicle from any Financial Institution

Maximum Amount of deduction

The benefit of deduction under this section would be available from A.Y.2020-21 and subsequent assessment years till the repayment of loan continues. A deduction for interest payments up to Rs 1,50,000.

Why section was Introduced?

  • To promote Electrical Vehicles

  • To Reduces dependence on oil imports

  • To Reduces Carbon Emissions

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