GST On Electric Vehicles Reduced To 5% From 12%, Prices May Come Down By Up To Rs 1 Lakh
GST Council is the latest one among the Indian authorities to push for electric vehicle adoption in the country. In a critical move to make owning and operating EVs more affordable for the Indian public the council has decided to cut down the GST applicable on EVs from 12% to 5%
GST Council is the latest one among the Indian authorities to push for electric vehicle adoption in the country. In a critical move to make owning and operating EVs more affordable for the Indian public, the council has decided to cut down the GST applicable on EVs from 12% to 5%.
Price of EVs has been a major roadblock in the increased adoption of such clean vehicles in the country. Considering their market price is almost double than that of their IC engine counterparts, the EV industry in India has not found too many buyers to date. The government now aims to change that through increased incentives to those opting for such vehicles. In practice, the new GST can bring down the prices of entry-level EVs by as much as Rs 1 lakh, while premium electric cars like the Hyundai Kona can experience a much bigger discount. Ather electric, for instance, has announced that it will be passing on this tax benefit to its customers. Other EV makers are yet to reveal the updated pricing around the new GST.
Reducing the GST on electric vehicles to 5% is one of many such moves by the Indian authorities. In addition to reducing the GST on electric vehicles, the council has also decided to cut down the applicable GST on electric vehicles chargers to 5% from an earlier 18%.
As per the council, the new GST rates will be applicable starting August 1, 2019. Apart from the personal vehicles, the council has also approved exemption from GST on electric buses to be hired by local transport authorities.
The idea is to bring about a transition in the consumer behaviour in the country, preferable towards EVs rather than fossil fuel run vehicles. To achieve this, the council might soon also increase the registration charges on petrol and diesel vehicles.
(Representative Image: Reuters)
Also read: Like Tesla's Gigafactories, India Will Setup 4 Plants To Produce EV Batteries In The Country
On the other hand, sale of EVs is being promoted on almost every front. During the recent budget announcement, Finance Minister Nirmala Sitharaman proposed an income tax deduction of up to Rs 1.5 lakh on interest paid on loans taken for EVs.
The move is being hailed by the industry players. Hero Electric India, for instance, noted that ¡°after the reduced subsidies and duty changes in FAME 2, the price of affordable segment Electric vehicles had gone up by around 20%.¡± However, it also mentioned some more steps which can be taken to further increase the adoption of EVs. Subsidy on all the EVs to be Rs 20000/Kwhr of battery and reduction in GST on spare batteries to 5% from 18% being some of them.
(With inputs from PTI)
