- The tax rate is reduced from 12 per cent to 5 per cent on electric vehicles
- A reduction from 18 per cent to 5 per cent also happened on EV chargers
- GST Council also made the hiring of electric buses by local authorities tax-free
Federal indirect tax body, the Goods and Services Tax (GST) Council, on Saturday decided to reduce tax rates on electric vehicles and chargers from 1 August, reported the Mint.
The tax rate is reduced from 12 per cent to 5 per cent on vehicles and from 18 per cent to 5 per cent on electric vehicle chargers.
The Council also made the hiring of electric buses by local authorities tax-free. The exemption is applicable on buses with a carrying capacity of more than 12, as per an official statement. The statement also said that the lower 5 per cent tax rate on chargers is applicable to charging stations too.
Why such a move?
The tax cut is part of the support that policy makers want to give to electric mobility and to reduce the dependence on fossil fuels for transportation. India has committed to contributing to the global efforts to cut down carbon emissions and is taking leadership on this.
The share of electric vehicles in India is negligible at the moment. The government wants to accelerate the production of electric vehicles as well as its adoption by consumers through incentives. Finance Minister Nirmala Sitharaman had in her FY19-20 budget announced tax relief for the purchase of electric vehicles too. However, industry experts welcomed the move.
