27 Jul 2019
GST Council reduces tax on electric cars to 5%
In a move to push people towards electric vehicles, the Goods and Services Tax (GST) Council slashed the tax rate on electric vehicles (EVs), bringing it down from 12% to 5%, on Saturday.
Chaired by Union Finance Minister Nirmala Sitharaman, the Council meeting was reportedly held via video conferencing and comprised state finance ministers.
Here are more details.
GST on EV chargers also reduced to 5%
Along with the vehicles, the GST rates imposed on EV chargers, used to fuel these vehicles, were also reduced to 5%. Previously, EV chargers had a GST rate of 18% imposed.
Additionally, the Council even approved an exemption from GST for electric buses hired by local authorities.
According to reports, the new rates will come into effect from August 1, 2019.
Government likely to hike registration charges on petrol/diesel vehicles
The move comes at a time when the government is eyeing affordable electric transport.
In the Budget, Sitharaman had proposed an income tax deduction of up to Rs. 1.5L on the interest paid on loans taken to purchase electric vehicles.
Reportedly, the government is likely to hike registration charges on petrol/diesel vehicles, which have GST rates in the highest bracket of 28% plus cess.
'EV industry now awaits GST reduction in spare batteries'
Meanwhile, Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles told News18, "We welcome the 7% reduction in GST as it will reduce the gap between EVs and IC Engine vehicles."
He added, "The EV industry now awaits the corresponding reduction of the 18% GST in the spare batteries as it will help maintain the low running cost of EVs over their lifetime."
India vowed to cut carbon emissions by 33-35% by 2030
Notably, India is committed to reducing its carbon emissions and hopes to achieve 40% of cumulative energy from non-fossil fuel-based sources. In 2015, India had pledged to cut the emission intensity of its gross domestic product (GDP) by 33-35% by 2030 against 2005 levels.