EV push: GST Council cuts tax rate to 5% on electric vehicles

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Updated: July 27, 2019 1:37:54 PM

The high-powered GST Council on Saturday decided to reduce the tax rate on electric vehicles (EVs) to 5 per cent from the existing 12 per cent, effective from August 1.

The council also approved GST exemption for the hiring of electric buses by local authorities.

The high-powered GST Council on Saturday decided to reduce the tax rate on electric vehicles (EVs) to 5 per cent from the existing 12 per cent, effective from August 1. It also slashed the Goods and Services Tax (GST) on EV chargers from 18 per cent to 5 per cent, an official statement said after the 36th meeting of the council. The meeting, chaired by Finance Minister Nirmala Sitharaman, was held via video conferencing. The council also approved GST exemption for the hiring of electric buses by local authorities.

The Society of Manufacturers of Electric Vehicles (SMEV) on Saturday welcomed the reduction of GST on electric vehicles to 5 per cent, saying it is in line with the government’s steps to promote eco-friendly mobility, even as it sought a similar cut in spare batteries. SMEV Director General Sohinder Gill said with the reduction in GST, the gap between prices of EVs and internal combustion engine vehicles will also be reduced and will thus play a part in faster adoption of electric mobility.

“The government is lately showing very clear intentions of promoting EVs and GST reduction is one such measure in line with the series of actions taken by the government in the last few months,” Gill said in a statement. “We welcome the 7 per cent reduction in GST as it will reduce the gap between the EVs and the IC Engine vehicles,” he added.

Gill said if FAME-II was a dampener, the GST reduction is certainly a bright spot in the national EV policy. “The EV industry now awaits the corresponding reduction of the 18% GST in the spares batteries as it will help maintain the low running cost of EVs over their lifetime,” he said. The high-powered GST Council on Saturday decided to reduce the tax rate on electric vehicles (EVs) to 5 per cent from the existing 12 per cent, effective from August 1. It also slashed the Goods and Services Tax (GST) on EV chargers from 18 per cent to 5 per cent.

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