CHENNAI: In a significant development aimed at providing an impetus to adopting eco-friendly mobility solutions, the GST Council on Saturday decided to reduce GST rate on electrical vehicles from 12 per cent to 5 per cent and on EV chargers from 18 per cent to 5 per cent with effect from August 1.
The move meets a long-pending demand put forth by the burgeoning electric vehicles industry in India and comes close on the heels of the government unveiling a host of incentives for electric vehicles.
Earlier this month, the government had announced several sops for the electric vehicle industry, making it clear that it was on top of its agenda. The new move is likely to encourage the domestic manufacturing of e-vehicles. Lowering GST is likely to help EV manufacturers in cutting down production costs, which could further lead to a reduction in prices of electric vehicles. The decision comes at a time when many traditional car manufacturers are lining up funds to produce e-vehicles for mass markets like India.
Today’s decision is also in line with the government’s goal to promote EVs in India and cut down on conventional fuel-powered vehicles. The government has plans to increase the share of electric vehicles in India by 2030.
The GST Council has also decided to cut tax on EV chargers from 18 per cent to 5 per cent from the same period.
This could be a turning point for the e-vehicle industry in India, which is at a nascent stage at present. The Council has approved an exemption from GST on the hiring of electric buses by local authorities. This is another measure aimed at promoting electric vehicles as a mode of public transport.
Meanwhile, minister for fisheries and personnel & administrative reforms D. Jayakumar, who represented Tamil Nadu at the GST council meeting on Saturday through videoconferencing from here, has sought a reduction in GST for over 61 items including handloom products, rice, pulses, pickles, ghee, and matchbox besides exemption for micro irrigation implements, palm oil and kerosene distributed to the members of the public through the fair price shops across the state.
