GST Council slashes tax rate on electric vehicles from 12% to 5%

Electric Vehciles, EV, Finance Ministry, GST Council

The GST Council has decided to reduce rate on electric vehicles (EVs) from 12 per cent to 5 per cent and on EV chargers from 18 per cent to 5 per cent, effective from August 1, 2019.

It has also approved exemption from GST on hiring of electric buses by local authorities.

The meeting, chaired by Finance Minister Nirmala Sitharaman, was held via video conferencing.

India’s fledgling EV industry had welcomed tax breaks and incentives porposed in Finance Minister Nirmala Sitharaman’s Budget on July 5, 2019.

Sitharaman had told Parliament that GST on EV would be reduced from 12 per cent to 5 per cent and the government would provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase electric vehicles.

“These changes will give a boost to EVs. A gradual pick up in the demand for EVs is expected,” Pawan K Goenka, the managing director of Mahindra & Mahindra, told business news channel ET Now. However Delhi Minister Manish Sisodia told CNBC-TV18 that Punjab, Delhi and West Bengal were not in support of EV rate cut proposals fully.

That impact of this measure on government revenue will be just Rs 60 crore this fiscal, ET Now reported.

(With Agency Inputs)

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