GST Impact: Hybrid car on your mind ? Get ready to pay 13 percent more

Despite plans of being "fully" electric by 2030, the government's new tax structure has set electric mobility and hybrid cars back by at least 5 years!

By: | Published: July 7, 2017 10:36 AM
Toyota Camry Hybrid (Image used for representational purpose only)

It seems like we have spent an eternity talking about the discounts and rebates caused by the Goods and services tax. However, this multifaceted tax structure will have at least one major group standing to lose out big when the roll-out is complete and those are Hybrids and electric vehicles. Prior to the roll-out, a number of manufacturers from across the spectrum with vested interests in the field vocalised their concerns at the brutal taxation of what should otherwise be a subsidized technology. The governing council, led by Arun Jaitley turned down any hopes of such a thing saying that the law would not make exceptions for any “single” party. As a result most manufacturers have with electric cars in the pipeline have said that they will have to seriously reconsider their strategy. Under the incentivised structure that existed previously Hybrids and EVs, including soft hybrids like the Mahindra Scorpio MicroHybrid or the Maruti Suzuki Ciaz’s SHVS, were taxed at an understandable but far from nominal 30.3 percent. This, however, did put them in the tax bracket even lower than that of compact petrol which was being taxed at 31.5 percent.

As a direct result of the GST rollout, the government purged the list entirely adding them to the same tax bracket as large luxury vehicles and will attract a severe 43 percent tax. This means that cars like the Toyota Prius and the Honda Accord Hybrid are likely to get dearer by an astonishing 5-6 lakhs. Despite having negligible emissions and less fuel consumption than most compact petrol. Go figure.

What makes this even more confusing is the fact that the government, about a month prior to GST becoming hot topic decided to issue a global statement saying that it would go fully electric by 2030. Let's face it, it was ridiculous enough when they said it and with the current GST structure, it goes to show how seriously our union government takes even its own statements.

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