Electric Vehicle

Government Slashes GST On Electric Vehicles by 7%

Electric Vehicle

In a landmark move initiated by the Central Government, the GST Council in a recently held meeting has decided to curtail the tax rates on electric vehicles (EVs) and chargers. The council reduced the tax rates from 12% to 5% on EVs and from 18% to 5% on EV chargers. 

Commenting on the development, Panasonic’s Energy System Head, Atul Arya said that the move to reduce taxes on chargers will have a positive impact on the industry. Chargers have a higher cost and are among major stumbling blocks in the way of adoption of electric vehicles (EVs) in the country. The hiring of e-buses by the local authorities/organisations has also been made tax free by the council. As per an official statement, the exemption on the buses is applicable to those with a carrying capacity of more than 12 passengers. This move has come as a shot in the arm for the automotive industry that has been pushing for a tax boost to promote the sale of electric vehicles (EVs)in the country.

It is learnt that this tax cut has been made in line with the government’s plans to boost electric mobility and decrease the dependence on fossil fuels for transportation in the country. The Indian government is also committed to contribute and play its vital part in the global efforts to cut down on carbon emissions. In 2015, the Government of India has announced the reduction of the emission intensity of the country’s GDP by 33-35% from 2005 levels, by the year 2030. 

The world’s second-most populated country is also bound to achieve 40% of its cumulative electric power from non-fossil fuel-based energy resources.

The GST council’s move has also been appreciated by the Society of Manufacturers of Electric Vehicles. This move will come handy in the long-term to encourage the citizens for the easy adoption of EVs for the daily commute. Earlier this month, in the budget speech, Finance Minister, Nirmala Sitharaman had proposed an income tax deduction of INR 1.5 lakh on the interest paid on loans taken for purchasing electric vehicles (EVs). The NITI Aayog, too, has planned the transition to e-mobility for two-wheelers of less than 150cc by 2025 and for three-wheelers by 2023.

In another major move, the government has hiked the registration charges on diesel and petrol vehicles in the newly introduced Motor Vehicle Amendment Bill 2019. According to automobile industry experts, this step will significantly alter consumer behaviour in the long run.

Meanwhile, the new rates will be effective from 1 August 2019.

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