In the budget for 2019, the government announced the incentive to purchase electric vehicles. The finance minister had said that the advanced battery and registered e-vehicles would be incentivized under the scheme.
A new section 80 EEB had been introduced, which allowed the deduction for the interest paid on the loan that was taken for the purchase of electric vehicles.
The Income Tax Act of 1961's Section 80 EEB focuses on the interest payments made on loans taken out to purchase an electric vehicle for personal or professional use.
Additionally, it works with both two- and four-wheelers. Before the loan is paid off, you can still take advantage of Section 80 EEB deductions.
A deduction of up to 1,50,000 is permitted under Section 80 EEB. You can purchase an electric car for your own usage or for use in your business as an assessee. If you borrowed money to buy an EV for work and the interest paid on that loan is more than 1,50,000 rupees, you can deduct that extra sum from your company expenditures. To do this, though, make sure the company name or the owner of the firm is included on the vehicle's registration.
It should be emphasized that only a person will be eligible for deductions under Section 80EEB of the Income Tax Act. This means that no other type of entity, including Hindu Undivided Families, Firms, Companies, Associations of Persons, Limited Liability Partnerships, or Company, may benefit from this new section's provisions.
Section 80 EEB will allow for a deduction for interest payments up to Rs 1,50,000. An individual taxpayer is allowed to own an electric car for either personal or professional use. The deduction would make it easier for people who own electric cars for personal usage to deduct the interest they paid on their loans.
A person may additionally deduct up to Rs 1,50,000 for business purposes under section 80 EEB. Any interest payments beyond Rs. 1,50,000 may be written off as an expense for the company. The car must be registered in the owner's name or the business enterprise in order to be claimed as a business cost.
Please take note that while completing a return, an individual taxpayer should receive the interest paid certificate and have the appropriate paperwork, including the tax invoice and loan documentation, close to hand.
Phase II of the FAME scheme, which aims to encourage the use of electric vehicles throughout the nation, has received approval from the union cabinet. The Indian government has created the FAME (Faster Adoption and Manufacturing of Electric Vehicles) incentive program to encourage the utilization of electric and hybrid vehicles in the nation.
The program's sole goal is to support electric mobility, and it provides financial incentives to purchase them along with the development of the infrastructure for electric transportation and charging.
There are incentives for three-wheelers, four-wheelers, and electric two-wheelers inside the policy. Beginning on April 1, 2019, Phase II of the program will go through March 31, 2022. Phase II is a lengthened variation of Phase I. From April 1, 2019, - March 31, 2022, a total of Rs 10,000 crore would be spent on FAME India Phase II.