Nitin Gadkari to urge finance minister for reduction in taxes on hybrid vehicles

Auto industry is also planning to take up the matter of higher tax rate on hybrid vehicles with the Finance Ministry this week.

By: | Updated: May 25, 2017 6:38 PM
Toyota Camry Hybrid (Image used for representational purpose only)

Union minister Nitin Gadkari has said that he will ask finance minister Arun Jaitley to lower the taxes on hybrid vehicles and other automobiles that run on alternate fuel. According to GST rates announced last week, an additional cess of 15% has been levied upon hybrid vehicles, over and above the 28% cap, which brings the total tax equivalent to that of large luxury cars and SUVs.

The Indian automotive industry has expressed concern over high rates of tax on hybrid vehicles, saying that it would hamper the government's plans to promote green vehicles. At present hybrid vehicles attracts excise duty of 12.5 per cent with an effective overall tax rate of 30.3 per cent.

"I will be meeting Arun Jaitley soon to request that tax slabs for vehicles run on ethanol, bio diesel, bio CNG should be reduced. I will also request him to reduce tax rate on hybrid vehicles in order to tackle air pollution in the long run," Road Transport and Highways Minister Nitin Gadkari told PTI.

The minister asserted that the government's policy is to promote electric mobility in the country. GST rate on electric vehicles has been kept at 12 per cent. "It is our policy to encourage electric cars and buses. Shortly, I will be coming out a policy regarding this. Hybrid cars should also be encouraged, it saves fuel," he said.

"We import crude worth Rs 7 lakh crore. Electric, ethanol, bio diesel, bio CNG these are import substitutes and are cost effective, pollution free and indigenous too," Gadkari said. If such vehicles are encouraged on a large scale, the cost will also come down, he added.

Auto industry is also planning to take up the matter of higher tax rate on hybrid vehicles with the Finance Ministry this week. Some of the popular hybrid vehicles sold in India are Camry Hybrid and Prius from Toyota and Honda Accord. These cars are priced between Rs 31.98 lakh and Rs 38.96 lakh.