Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

Tax benefit on electric bike in India


Section 80 EEB is a newly inserted item in the Income Tax Act to boost electric vehicles in India. You can claim deductions up to Rs. 1.5 lacs under this provision if you have loaned from a bank or an NBFC between 1st April 2019 to 31st March 2023. In that case, you are entitled to the said deductions from 1st April 2020 till the repayment of the loan. Further, GST on electric bikes is 5% instead of 12%, making them more appealing. But how much you should loan to experience full action of this newly inserted space is to contemplate before making the final buying decision.

Critical features of tax benefits on electric bikes?

  • Only individuals can avail of the tax deductions under 80 EEB. Firms or companies are not eligible for this.
  • Deductions are capped at Rs. 1.5 lac.
  • The loaning institution must be a bank or an NBFC.
  • The loan must have been sanctioned between 1st April 2019 to 31st March 2023.

Which expenses are tax-deductible?

  • Interest: Your interest certificate from the loaning institution is proof that you’re eligible for the tax benefit.
  • Depreciation cost: This means the maintenance costs you incur on your electric bike. They, too, are tax-deductible.

While there can be no tax-free bike loans, these deductions coupled with lower GST rates on buying electric bikes will reduce your overall loan cost.

Additional read: How to use fixed deposits to get a car loan?

How much are you saving? Scenarios to consider:

Electric vehicles are expensive. 80 EEB attempts to provide financial incentives to buyers who purchase these costly items. But how far should you stretch to make full use of this provision?
Your tax benefit will depend on the cost of your bike and the income tax bracket you belong to. Factoring in that bike loans is usually short duration loans of 3 years maximum. If you belong to the 5% income tax bracket, your tax savings will be much lower compared to a buyer belonging to the 30% income tax bracket. That is after assuming that you’d buy a Rs 20 lac electric bike despite your 5% tax bracket.

In a nutshell:  

Tax benefits are something to look forward to. But you can’t decide to buy a Mercedes just because the fuel price is half of what it’s now, hypothetically speaking. Likewise, decide whether to buy an electric bike when your income allows you to exhaust the limit of that dedicated provision. If you still decide to stretch and buy, you are most certainly someone with values greater than money. While that’s respectful, you should not be made to choose principle at the cost of profit.

Additional read: How to Use Two-Wheeler Loan EMI Calculator to Calculate Monthly Instalment


There are other parameters to consider before purchasing an electric bike on loan. Special tax benefits are certainly appealing. This is especially true if your electric bike is used for business purposes where you make considerable profits. But let your stance towards clean air also guide your decision. And if your principles and profits merge anyhow, don’t resist because that’s rare.

Disclaimer– ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Mumbai - 400025, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730) and BSE Ltd (Member Code :103) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. We are distributors of Insurance and Mutual funds, Corporate Fixed Deposits, NCDs, PMS and AIF products. ICICI Securities Ltd. acts as a referral agent to ICICI Bank Ltd., ICICI Home Finance Company Limited  various other Banks / NBFC for personal finance & housing related services & the loan facility is subjective to fulfilment of eligibility criteria, terms and conditions etc. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.