Government is putting an all-out effort towards the wide- adoption of Electric Mobility and the manufacturers had been behesting for slashing down the GST on electric vehicles. To boost the demands of EVs and to make it affordable, the government has been going the extra mile constantly.
And the seamless efforts of government nailed down at the 36th GST council meeting on July 27th, 2019 when it was concluded to abbreviate the GST rate on electric vehicles (EVs) and chargers for electric vehicles. This is the second booster shot for EVs in the last four weeks.
GST on Electric Vehicles (EVs)
The Goods & Service Tax (GST) Council concluded to cut down the GST duty on all-electric vehicles (EVs). Now the existing GST rate of 12% will be reduced to 5%.
The new GST rate of 5% shall be applicable to all the future sales of electric vehicles, starting from 1st August 2019.
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GST on the charger for electric vehicles
In the 36th GST council meeting, the infrastructure for EV was also considered and to make it economical, the GST Council also cinched the rate contraction on the charger/charging stations for EV from 18% to 5%. The new rates will come into effect from 1st August 2019.
At present, the GST at the rate of 28% is leviable on petrol and diesel-based automobiles along with a cess. The price of E.V. is too high and the GST rates have been declined on these vehicles to contract the price gap between these two types of vehicles. However, the value of EVs are still expected to be hefty.
Other Pushes To EVs
Additionally, the government is anticipated to increase the registration charges for petrol & diesel-based vehicles constantly and rapidly to give a push to electric vehicles.
To make EVs affordable to consumers, the Union Budget 2019-20 is pressing pedals to give income tax benefit to EV buyer. An additional IT deduction of ₹1.5 lakh on the interest payable on loans availed for buying EVs will now be provided to the EV users. This additional benefit will sum up the total benefits to around 2.5 lakh for the loan period.
Also Read: Everything About GST Rate on Petrol and Diesel in India
Effects on EV Manufacturers
Reduction in GST on electric vehicles and associated accessories will bring a positive phase for four-wheeler as well as two-wheeler companies. The manufacturers had been appealing for the rate cut in GST on e-mobility for a long time now. Four-wheeler companies like Mahindra, Hyundai, BMW and Tata are anticipated to seize high revenue from the increased sales of their e-vehicle models. Next year, the Maruti-Suzuki will also join them with its new launch of e-vehicle. The two-wheeler companies such as Hero Electric, Ather Energy, Revolt Intellicorp, Kinetic Green, Log 9 Materials and 22Kymco will also encounter a rise in their EV sector.
Read more: Impact of GST on e-Rickshaw Tyres and Batteries
In India, the annual sale of four-wheelers counts to 30 lakhs in which the contribution of EVs reaches just approx 10-15,000. And the total contribution of EVs in total sales at global font is around 1 per cent, except Norway where the share is in the double figures. So, it’s pressed for the time when E.V. adoption should be emboldened.