IBEF: July 22, 2019
The government is set to cut Goods and Services Tax (GST) on electric vehicles to 5 per cent this week. A specially assembled GST Council meeting by means of video conferencing will take up the proposition on July 25, a senior government official privy of the development said. The committee of authorities looking at fitment of GST rates "has overall concurred that rate on EV should be cut to 5 per cent from 12 per cent.
Those purchasing electric vehicles will get an extra income tax deduction of Rs 1.5 lakh (US$ 0.002 million) on the interest paid on loans taken to purchase EVs. "This adds up to an advantage of around 2.5 lakh (US$ 0.003 million) over the loan period to the citizens who take loans to buy electric, said by finance minister Nirmala Sitharaman. The government is presently quick to push tax changes on the indirect tax side to complement the measures taken in the budget.
Besides bringing down GST on electric vehicles, it is proposed to cut GST on chargers for e-vehicles to 12 per cent from 18 per cent.
Authority research organization Niti Aayog has arranged a guide that imagines all vehicles sold after 2030 being electric. The guide sets out that each of the two-and three-wheelers should go electric from 2023 and every single business vehicle from 2026.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.