Chapter VIII - Deductions to be Made in Computing Total Income
Section 132
Section 132: deduction for interest on an electric vehicle loan
Section 132 is the Income-tax Act, 2025's version of the deduction long known as "80EEB" - for an individual who takes a loan from a financial institution to purchase an electric vehicle, within a specific loan-sanction window.
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Need advice on Section 132?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) An assessee, being an individual, shall be allowed a deduction of interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle, as per the provisions of this section.
(2) The deduction under sub-section (1) shall be subject to the condition that the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2019 and ending on the 31st March, 2023.
(3) The deduction under sub-section (1) shall not exceed ₹ 150000 and shall be allowed in computing the total income of the individual for the tax year beginning on the 1st April, 2019 and subsequent tax years.
(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year.
(5) For the purposes of this section,— (a) “electric vehicle” means a vehicle powered exclusively by an electric motor, whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy; (b) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act and includes a non-banking financial company.
Introduction
An individual may deduct interest on a qualifying loan used to buy an electric vehicle, up to ₹1.5 lakh, if the loan was sanctioned within the statutory 2019–2023 window. The vehicle and lender must meet the definitions in subsection (5).
Key takeaways
Electric-vehicle loan
An individual may deduct up to ₹1,50,000 of interest on a qualifying financial-institution loan for an electric vehicle.
Historical sanction window
The lender must have sanctioned the loan from 1 April 2019 through 31 March 2023; interest allowed here cannot also be deducted elsewhere.
What Section 132 allows
An individual can deduct interest payable on a loan taken from a financial institution for the purpose of purchasing an electric vehicle, up to a maximum of ₹1,50,000 a year - but only if the loan was sanctioned between 1 April 2019 and 31 March 2023.
"Electric vehicle" means a vehicle powered exclusively by an electric motor, drawing traction energy exclusively from a traction battery installed in the vehicle, with electric regenerative braking.
Conditions
- The loan must be from a financial institution (a bank, or a non-banking financial company) - not a private or informal lender.
- Interest deducted under this section for a given amount cannot also be deducted under any other provision of the Act.
- Because the loan-sanction window (2019-23) has closed, this section is now mainly relevant to taxpayers still repaying a loan sanctioned in that period.
Confirm vehicle and lender
The electric vehicle definition requires exclusively electric propulsion and battery traction with the stated regenerative-braking feature. The lender definition includes qualifying banks and non-banking financial companies.
Step-by-step flow for applying Section 132
- 1
Is the claimant an individual with a loan from a financial institution to buy an electric vehicle?
A financial institution includes a bank and a non-banking financial company. The vehicle must meet the definition in Section 132(5)(a).
- No: No deduction.
- Yes: Go to the next step.
- 2
Was the loan sanctioned between 1 April 2019 and 31 March 2023?
- No: No deduction under Section 132.
- Yes: Go to the next step.
- 3
Deduct interest up to ₹1,50,000
Interest allowed here cannot be deducted under any other provision for the same or any other tax year.
Practical checklist
Do
- Retain the sanction letter, lender statement, purchase invoice and vehicle specifications.
- Verify sanction from 1 April 2019 through 31 March 2023 and cap eligible interest at ₹1.5 lakh.
Avoid
- Do not claim the same interest again under another provision.
- Do not assume every vehicle marketed as electric meets the exact subsection (5) definition.
Illustrative example
Worked example: an EV loan sanctioned before the deadline
Hypothetical facts (illustration only, not a real taxpayer): Mr. Menon, an individual, had a loan sanctioned by a non-banking financial company in February 2023 to buy a vehicle that meets the Section 132(5)(a) definition of electric vehicle. Interest payable for the current tax year is ₹62,000.
Lender and vehicle
An NBFC is a financial institution under Section 132(5)(b); the vehicle meets the definition.
Sanction window
February 2023 falls within 1 April 2019 to 31 March 2023.
Amount
₹62,000 is below the ₹1,50,000 ceiling, so all of it is deductible.
Outcome
- Deduction under Section 132: ₹62,000, which cannot be claimed again under any other provision.
- Had the same loan been sanctioned in May 2023, no deduction would be available under this section.
Glossary
- Electric vehicle
- A vehicle meeting the exclusive electric propulsion, traction-battery and regenerative-braking conditions in subsection (5)(a).
- Financial institution
- The qualifying bank or non-banking financial company described in subsection (5)(b).
Frequently asked questions
Can I claim this deduction for an electric vehicle loan I'm taking now?
No - the loan must have been sanctioned between 1 April 2019 and 31 March 2023 to qualify under Section 132.
Is this the same as "80EEB"?
Yes - the same electric vehicle loan interest deduction, now numbered Section 132 under the Income-tax Act, 2025.
Does this cover a loan for an electric two-wheeler?
The section applies to any "electric vehicle" as defined - a vehicle powered exclusively by an electric motor with an installed traction battery - which is not limited to four-wheelers.
Need help applying this provision to your situation?
Check your Section 132 EV loan interest deduction with our tax teamLast updated 9 October 2026