NEW DELHI: A high-powered committee of the GST Council has decided on Saturday to reduce the tax rate on electric vehicles from 12 percent to 5 percent. The decision will come into effect from the 1st of August. An official statement after the 36th meeting of the council said, it has also reduced the Goods and Services Tax (GST) on electric vehicles chargers from 18 percent to five percent.
The meeting, chaired by Union Finance Minister Nirmala Sitharaman, was held through video conferencing. The council also approved GST exemption for hire electric buses through local authorities. The Society of Manufacturers of Electric Vehicles (SMEV) has termed the reduction in the freight and service tax (GST) rate on such vehicles as a good step and is in line with the government's policy of enhancing the modes of environment-friendly traffic.
The SMEV has also sought to reduce the tax on spare batteries sold separately for electric vehicles. Director-General of SMEV, Sohindar Gill said the reduction in GST will reduce the gap in the prices of trains running on battery and petroleum fuel and people will adopt electric vehicles faster. "For quite some time, the government has started to show clear intentions to promote electric vehicles. This reduction in GST is a step taken by the government in this direction. "
"We welcome the seven percent drop in GST. This will reduce the gap between electric and piston-cylinder petroleum-fueled vehicles. He said the Fame-2 policy was frustrating but the tax reduction move was "an important point of national electric vehicle policy". He said the tax on spare batteries should also be reduced to 18 percent at present.
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