The Central Government is expected to reduce the Goods and Services Tax (GST) on electric vehicles (EVs) from the existing 12 % to 5 %.
Nirmala Sitharaman, the Finance Minister of India, on the 27th of July, conducted the 36th meeting of the GST Council through a video call and discussed the same.
The members of the Council accepted the decision unanimously, except one or two members who were unsure about the GST reduction.
The Society of Manufacturers of Electric Vehicles (SMEV) also agreed with Ms. Sitharaman and said the step will help in promoting ‘eco friendly mobility.’
Sohinder Gill, the General Director of the SMEV, said, “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.”
Apart from electric vehicles, the GST on electric vehicle chargers will also be reduced from the existing 18 % to 5 %.
Nirmala Sitharaman’s step was expected. This is because during her first speech in the Budget session, Ms. Sitharaman highlighted the EV matter and said, “Also to make electric vehicle affordable to consumers, our Government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase an electric vehicle.”
The move of the Central Government will help the production of EVs in India.
Besides this, the Council also gave a green signal to exemption in cases where local authorities hire electric buses, as it will promote electric vehicles as a means of public transport.
The reduction in the GST of electric vehicles will be implemented from the 1st of August 2019.
Stay tuned for further updates.
