If you’re planning to trade your petrol engine for a silent, eco-friendly electric vehicle (EV), the government has a green gift waiting for you in the tax code. Section 80EEB was introduced to make the switch to electric mobility a little more affordable. While EVs often have a higher upfront cost, this section helps you recover some of that through significant tax savings on your loan interest. As we move into the 2025-2026 tax year, here is everything you need to know about claiming this benefit in a way that actually makes sense.

What is Section 80EEB?

Think of Section 80EEB as a special reward for going green. It allows you to deduct the interest you pay on an electric vehicle loan from your total taxable income.

The Big Saving: You can claim a deduction of up to ₹1,50,000 (1.5 Lakh) every year.
The Interest Only Rule: Just like home loans, this benefit only applies to the interest part of your EMI, not the principal amount you’re paying back.
The Regime Catch: In 2025-26, this deduction is only available under the Old Tax Regime. If you’ve switched to the New Tax Regime, you won't be able to claim this specific benefit.

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Who can claim this?

This isn't a benefit for companies or big businesses; it’s specifically for the common man.

Individuals Only: Only individual taxpayers can claim this. If you’re a business (HUF, Partnership, or Company), this section doesn't apply to you.
First-Time Benefit: You can only claim this for one EV loan. You can't buy an electric fleet and claim it for all of them!
Type of Vehicle: Whether you’re buying a zippy electric scooter or a family electric SUV, as long as it runs solely on electricity, you’re covered. Hybrid cars (petrol + electric) do not qualify.

The Sanction date trap

This is the most critical part to check before you file your taxes in 2026. Section 80EEB has a specific window for the loan approval.

The Window: Your loan must have been sanctioned between April 1, 2019, and March 31, 2023.
What if I buy an EV in 2025? If you take a new loan today (in 2025), you technically cannot start a fresh claim under 80EEB because the original window ended in 2023.

However, if you are still paying off a loan that was sanctioned within that window, you can continue to claim the deduction for FY 2025-26 until the loan is fully repaid.

How much can you actually save?

Let’s look at a quick example. Suppose you bought an electric car with a loan sanctioned in early 2023. This year, you paid ₹1,80,000 in interest.

Total Interest Paid

₹1,80,000

Max Deduction Allowed (80EEB)

₹1,50,000

Tax Saving (if you're in the 30% slab)

₹45,000 + Cess

That’s a massive chunk of money back in your pocket just for choosing a cleaner way to commute!

Summary Table: Section 80EEB at a Glance

Feature

Details for FY 2025-26

Maximum Limit

₹1,50,000 per year

Who is it for?

Individual Taxpayers only

Loan Period

Sanctioned between April 2019 and March 2023

Vehicle Types

2-Wheelers and 4-Wheelers (Pure EV)

Benefit Duration

Until the loan is repaid

Tax Regime

Old Regime Only

Pro-Tips for your filing

Get the Interest Certificate: Don't guess the amount. Ask your bank for an Interest Certificate at the end of the financial year. It clearly separates your principal from your interest.
Business Owners: If you use your EV for business (like a consultancy or a small firm), you can claim the first ₹1.5 Lakh under Section 80EEB. Any interest above that can often be claimed as a business expense!
Check the Sanction Letter: Ensure the date on your bank's formal sanction letter falls within the eligible window (before March 31, 2023).

Conclusion

Section 80EEB was the government's way of saying Thank You to early adopters of electric vehicles. While the window for new loans has closed for now, thousands of Indian taxpayers are still benefiting from this deduction as they repay their loans in 2025-26. If you are one of them, make sure you don't miss out on this ₹1.5 Lakh free pass from your taxable income. If your loan is large, it’s worth sticking with the Old Tax Regime just to keep this benefit alive.

Frequently Asked Questions (FAQs)

Can I claim 80EEB if I buy an electric cycle?

Generally, the law applies to Electric Vehicles that require registration. Most low-speed e-cycles don't qualify, but high-speed electric scooters do.

Can I claim this deduction every year?

Yes, you can claim it every year until your loan is fully paid off, provided the loan was sanctioned in the correct window.

Is there a tax benefit if I buy an EV without a loan?

No. Section 80EEB is specifically for the interest on a loan. If you pay cash, you won't get this specific tax break.

Can I claim 80EEB and 80C together?

Yes! Section 80EEB is an additional deduction. It doesn't interfere with your ₹1.5 Lakh limit in Section 80C.

What if the loan is in my spouse's name?

Then only your spouse can claim the deduction. The person whose name is on the loan and who pays the EMI gets the tax benefit.

Does it cover Hybrid cars like the Grand Vitara or City e:HEV?

No. The vehicle must be powered exclusively by an electric motor. Hybrids that use petrol do not qualify.

Is a loan from a relative eligible?

No. The loan must be from a Financial Institution (Bank) or a registered NBFC.

Is there any GST benefit on EVs?

Yes, but that's for the purchase. All EVs carry a low 5% GST, which makes the sticker price much lower than petrol cars (which are at 29% or 40%).

Can I claim 80EEB if I use the EV for my startup?

Yes, as an individual business owner, you can claim it. If the interest is more than ₹1.5 Lakh, you can even claim the extra as a business expense.

What documents should I keep ready?

Keep your Loan Sanction Letter, the Interest Certificate from the bank, and the Vehicle Registration (RC) in your files.

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