Policy push: GST rates on Electric Vehicles slashed
The rates will be applicable from the 1st of August this year.
In a move slated to give considerable impetus to the sale of Electric Vehicles in the country, the Goods and Services Tax (GST) Council has reduced the GST rate on Electrical Vehicles by more than 50 per cent.
“The GST rate on Electric Vehicles has been brought down from 12% to 5% and on Electric Vehicle Chargers from 18% to 5%,” states a government communique after the Council meeting today. The GST Council is the apex body to decide the rates and modalities of unified nationwide taxing.
The rates will be applicable from the 1st of August this year. The GST Council has also approved an exemption from GST of hiring of Electric Buses by local authorities, the official communication added.
The priority set by the government in encouraging the use of Electric Vehicles is abundantly clear by the fact that today’s GST Council meet was called on the single agenda to decide the tax rates on Electric Vehicles and its chargers.
The 36th meeting of the GST Council—originally scheduled for Thursday—to decide on tax rates on electric vehicles, was postponed by a day as Finance Minister Nirmala Sitharaman was pre-occupied in Parliament.
Today’s government move has also drawn criticism from some quarters. West Bengal Finance Minister Amit Mitra, who is a member of the Council, on Tuesday, wrote to Sitharaman objecting to the "hurriedly called Council meet" on the "single agenda" of Electric Vehicles. The GST Council is chaired by the Union Finance Minister and has state finance ministers as members.
“Other important issues flagged by the states should be included in the agenda,” he wrote to the Union Finance Minister on Tuesday.
Mitra called it a "myopic view" of the government in proposing a sharp cut in GST rate on e-vehicles and said the move ignores “the disastrous impact of such a move on the existing automobile units and entire auto service sector.”
GST rates on petrol, diesel cars, and hybrid vehicles are currently in the highest bracket of 28 percent; this excludes Cess charges, which are added to the rates.