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GST Council reduces tax on Electric Cars and EV chargers to 5%

Business News, Nation, (New Delhi), July 27:-The GST Council on Saturday has decided to reduce tax rates on electric vehicles from 12 per cent to 5 per cent and when it comes to the EV chargers that are required to charge these electric vehicles, the tax rate has been reduced from 18 per cent to now 5 per cent.

The new rates will be effective from 1st August 2019. The council further approved an exemption from GST on the hiring of electric buses by local authorities.

The Council, which is chaired by Union Finance Minister and has state finance ministers as members, in its meeting last month, had referred the issue relating to Goods and Services Tax (GST) concessions on electric vehicles, electric chargers and hiring of electric vehicles, to an officers committee.

Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (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. We welcome the 7 percent reduction in GST as it will reduce the gap between the EVs and the IC Engine vehicles. If FAME 2 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 percent GST in the spare batteries as it will help maintain the low running cost of EVs over their lifetime.”

GST rate for petrol, diesel cars and hybrid vehicles, on the other hand, are in the highest bracket of 28 per cent plus cess.

-(NAV, Inputs: Agencies)

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