The GST council has taken a remarkable move by reducing the GST rate to 5% from 12% for electric vehicles (EVs) on Saturday. Electric Vehicles, also known as EVs, are propelled by electric motors/generators. They do not only have economic benefits but they also protect our surroundings by releasing less pollution to the environment.
The rationale behind taking a step is to encourage electric vehicles’ sales in the market.
This decision has also been embraced by the Society of Manufacturers of Electric Vehicles (SMEV).
India has already made its commitment to minimizing carbon emissions and is leading this initiative. Also, in 2015, the capital city of India, announced its own objective of shrinking carbon emissions’ intensity by 33-35% by 2030. Hence, adopting such measures will help India to reduce poisonous pollutants.
The government is already in the process of making EVs cost-friendly and this decision taken by the federal indirect tax body might increase the acceptance behavior towards EVs in the society. However, the government is also cogitating on increasing the registration charges on petrol/diesel vehicles.
The share of EVs in the Indian GDP is negligible and tax slashed to 5% from 12% expect to expedite the sale of EVs in the Indian market.
The council also reduced the GST for EVM Chargers from 18% to 5%.
The ruling government is implementing several effective strategies to make India a better India. To hasten the adoption of EVs, Nirmala Sitharaman proposed an income-tax deduction of Rs. 1.5 Lakhs against interest paid on loans for buying EVs.
“The reduced rate of GST on electric vehicles should help foster demand for this environment-friendly variant, through a tax arbitrage between conventional vehicles and EVs,” said Abhishek Jain, Tax Partner, EY India.
The meeting chaired by Nirmala Sitharaman also took a few decisions on altering the GST Law.
The new rates for EVs will be operative from August 1, 2019.