Decoding Government Incentives for Electric Vehicles: FAME, PLI, and the Post-80EEB Era
Introduction
The Indian government has been a crucial catalyst in the nation's EV adoption journey. However, the nature of its support is evolving. While direct consumer tax breaks were a key feature of the initial push, the focus is now shifting towards strengthening the domestic manufacturing and infrastructure ecosystem. This guide clarifies what incentives were available, what has changed, and what benefits buyers can still leverage in 2025 and beyond.
The Big One That's Gone: A Final Verdict on Section 80EEB
A significant amount of outdated information regarding this tax benefit persists online. This guide provides definitive clarity.
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What Section 80EEB Was: Introduced in the 2019 Union Budget, Section 80EEB of the Income Tax Act allowed individual taxpayers to claim a deduction of up to ₹1.5 lakh on the interest paid on a loan taken to purchase an electric vehicle. This applied to both two-wheelers and four-wheelers and was available only to individuals, not to companies, HUFs, or other entities.
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The Critical Expiry Date: The most crucial detail is that this deduction was time-bound. It was only applicable for loans sanctioned between April 1, 2019, and March 31, 2023. Any EV loan sanctioned after this date is not eligible for the Section 80EEB deduction.
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Who Can Still Claim It? Individuals who secured their EV loan before the March 31, 2023, deadline can continue to claim the deduction on the interest paid each year until their loan is fully repaid.
What Incentives Remain in 2025?
With the sunset of Section 80EEB, the government's support has become more industry- and infrastructure-focused. Key ongoing initiatives include:
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The FAME Scheme: The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, particularly FAME-II with its ₹11,500 crore outlay, has been pivotal in providing demand incentives and funding the establishment of public charging infrastructure. This is being built upon by new initiatives like the PM E-DRIVE scheme, which targets the rollout of over 300,000 commercial electric three-wheelers.
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The Production-Linked Incentive (PLI) Scheme: This is the cornerstone of the government's strategy to build a resilient domestic EV supply chain. It provides financial incentives to companies for manufacturing advanced chemistry cell (ACC) batteries and EVs within India, aiming to reduce the country's dependence on imports.
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GST and State-Level Benefits: A significant and ongoing benefit for consumers is the reduced Goods and Services Tax (GST) rate of 5% on the purchase of EVs, compared to the 28% or higher rates for many ICE vehicles. Additionally, many state governments offer their own subsidies, including waivers on road tax and registration fees, which can substantially lower the on-road cost of an EV.
Conclusion
The Indian government's EV policy has strategically evolved. The initial phase of stimulating demand through direct consumer tax deductions like Section 80EEB has concluded for new buyers. The focus has shifted to building a self-sufficient domestic manufacturing base and a widespread charging infrastructure. For consumers in 2025, the primary financial benefits now arise not from a specific tax deduction but from a fiercely competitive and increasingly specialised lending market that is vying for their business.
While the 80EEB benefit has ended, the financing landscape is more competitive than ever. For a complete overview of all current financing options, read our Ultimate Guide to EV Loans in India.