Buying Electric Vehicles May Soon Become Cheap Due to Lower GST

Society of Indian Automobile Manufacturers (SIAM) has recommended that to reduce the tax rates on electronic vehicles from 12 percent to 5 percent under GST to promote such vehicles in India, apart from providing one-time Income Tax (I-T) deduction of 30 percent on prices of e- vehicles for non-financed buyers. While submitting the white paper to the government, the SIAM also demanded to exempt the road tax on EVs. SIAM also said that to promote electrical mobility in India it will require a multi-pronged, segment and customer-specific policy.

The policy must cover several points such as enabling charging infrastructure build-out, encouraging domestic manufacturing, improving affordability and acceptance of EVs by bridging viability gap and creating public awareness besides providing other enablers, it said.

Read Also: GST Impact on Automobile and Spare Parts Industry in India

According to the White Paper, “Demand incentives or cash subsidies can at best be a short-term measure to kick-start the process. However, tax rebates and other fiscal and non-fiscal measures can be sustained over a longer term and will have a greater impact and outreach.”

On specific policy measures, it is anticipated that GST rates on all-electric vehicles are likely to be reduced from 12 percent to 5 percent and road tax may be fully exempted, said SIAM.

For EV buyers, the white paper proposed a “one-time Income Tax deduction of 30% of vehicle price from total taxable income to individual purchasers, who have not availed any bank finance for the purchase”.

Recommended: GST Helps Oil and Automobile to Gain Momentum

To evaluate the reduced price on such kind of incentives vehicles of maximum INR 25 lakhs may be considered. According to the white paper, those individuals who had taken the bank loan to purchase personal EVs is described as, “Income Tax deduction of up to ₹1 lakh on the interest component for loans taken may be given every year during the tenure of the loan, like government’s scheme on home loans.”

Leave a Reply

Your email address will not be published. Required fields are marked *