With an aim to improve the environment and reduce vehicular pollution, the Finance (No. 2) Act, 2019 introduced a new section 80EEB. This section provides an additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. However, it has been suggested that the section may be amended to incorporate a condition of not owning any other electric vehicle at the time of sanctioning the loan.
The Explanatory Memorandum for section 80EEB states that in order to avail the benefit of the deduction, the assessee should not own any other electric vehicle on the date of sanction of loan. However, this condition is not present in the section 80EEB of the Finance (No. 2) Act, 2019. This condition is similar to the one present in section 80EEA which relates to not owning any other house property on the date of sanction of loan.
It has been suggested that section 80EEB may be suitably amended to incorporate the condition of not owning any other electric vehicle at the time of sanction of loan as envisaged in the Explanatory Memorandum. This would remove administrative and procedural difficulties that may arise.
Overall, Section 80EEB is a positive step towards promoting the adoption of electric vehicles in the country and reducing vehicular pollution. However, incorporating the suggested condition would make the process of availing the tax incentive more streamlined and remove any confusion or difficulties that may arise.