Tax boost for EVs\, GST slashed to 5% from 12%

In a landmark move by the government, the GST Council has brought down the GST rate on electric vehicles (EVs) to 5 per cent from 12 per cent. The move has come as a shot in the arm for the auto industry which has been pushing for a tax boost to promote the sale of EVs.

The Society of Manufacturers of Electric Vehicles (SMEV) has welcomed the move to slash the GST.

The move comes at a time when the government is already in the process of making EVs affordable. In another move which could significantly alter consumer behaviour in favour of EVs, the govt is likely to hike the registration charges on petrol/diesel vehicles.

Four takeaways from the GST Council meeting are:
*The GST Council slashed the tax on EVs to 5 per cent from 12 per cent.

*The Council also slashed the GST on EV Chargers from 18% to 5%.

*The new rates will be effective from 1st August 2019.

*GST Council also approved exemption from GST on hiring of Electric Buses by local authorities.

The move is seen as a much needed step to encourage the adoption of EVs by people. The EV manufacturers had been asking for a cut in the GST rate on electric vehicles as higher cost of acquisition and inadequate infrastructure deterred people from looking at EVs.

The government is aggressively pushing the adoption of EVs. In her maiden Budget, Nirmala Sitharaman had proposed an income tax deduction of Rs 1.5 lakhs on interest paid on loans taken for EVs.

The government think tank Niti Aayog has planned transition to e-mobility for two-wheelers less than 150 cc by 2025 and three-wheelers by 2023.
The meeting, chaired by Finance Minister Nirmala Sitharaman, was held via video conferencing.