Automobiles industry body Society of Indian Automobile Manufacturers (SIAM) has urged the government to bring down the rate of the GST (goods and services tax) levied on electric vehicles to 5% from 12% at present. Sugato Sen, deputy director of SIAM, said: “Batteries being produced cost a lot, so buying electric vehicles is becoming difficult for customers. We need to have prices that are firstly acceptable in the market. Over time, as prices of EVs come down, then the rate can be changed back.” The industry body has also recommended that EVs be fully exempted from road tax and toll charges. SIAM has submitted a white paper to the government on electric vehicles, in which it has recommended a change in the policy to make EVs more affordable for boosting sales. SIAM has said only 40% of all private vehicle sales will be that of EVs by 2030, a year by which the government hopes to sell only EVs. SIAM has suggested 2047, the 100th year of Independence, as a more realistic target for having 100% pure electric vehicles i.e. battery electric and fuel cell vehicles. The domestic automobile industry, SIAM has said, aims to become a global hub for design, manufacture and exports of pure electric vehicles, thus supporting the ‘Make in India’ initiative. The industry body said, “Demand incentives or cash subsidies can at best be a short-term measure to kick start the process. However, tax rebates and other fiscal and non-fiscal measures can be sustained over a longer term and will have a greater impact and outreach. For the next few years, there will be need for all such measures to collectively bridge the gap and make EVs a preferred choice for consumers.”
The 12% tax charged on EVs now is less than half the tax levied on regular gasoline and diesel-fuelled vehicles, which attract taxes in the range of 29-50%. Even hybrid vehicles are taxed at 43% in India. A 5% GST is generally levied on essential items such as kerosene, coal, medicines and stents. However, the GST Council has been reviewing several items under different tax brackets and has also reduced tax rates on a variety of them. In its meeting in November, the council slashed rates on 178 items to 18% from 28%. After reduction in tax, only 50 items are now in the top tax bracket of 28%.