n a welcome move for e-vehicles manufacturing industry in India, a decision was taken during the 36th GST Council meeting to reduce Goods and Services Tax (GST) rates on electrical vehicles (EV) from 12 per cent to 5 per cent from August 1, 2019.
The GST Council has also decided to cut tax on EV chargers from 18 per cent to 5 per cent from the same period. It is a major development as it could be the turning point for the e-vehicle industry in India, which is at a nascent stage at present.
With today’s decision, the GST Council has met a long-pending demand put forth by the burgeoning electric vehicles industry in India.
Lowering GST is likely to help EV manufacturers in cutting down production costs, which could further lead to a reduction in prices of electric vehicles. The decision comes at a time when many traditional car manufacturers are lining up funds to produce e-vehicles for mass markets like India.
Today’s decision is also in line with the government’s goal to promote EVs in India and cut down on conventional fuel-powered vehicles. The government has plans to increase the share of electric vehicles in India by 2030.
Meanwhile, the GST Council has also approved exemption in cases where local authorities hire electric buses-another step to promote electric vehicles as a mode of public transport.
Earlier in the month, the government announced several sops for the electric vehicle industry, making it clear that it was on top of its agenda. The new move is likely to encourage the domestic manufacturing of e-vehicles.ADVERTISEMENT
As industry body FICCI had earlier said, the move could provide a massive boost to the sector and help India achieve its e-vehicle targets over the next few years.
