Economy

Industry body welcomes GST rate cut on Electric Vehicles, charging stations

Our Bureau New Delhi | Updated on July 27, 2019

The FAME 2 scheme was criticised by EV Manufacturers for being restrictive and favouring commercial vehicles instead of personal mobility.

Electric vehicle makers’ association and auto makers have welcomed the Central government’s announcement on GST rate reduction for electric vehicles, charger and charging stations.

The 36th GST Council Meeting held on Saturday recommended a reduction of GST rate on all electric vehicles from 12 per cent to 5 per cent. Also, the GST rate on the charger/ charging stations for Electric vehicles be reduced from 18 per cent to 5 per cent.

The Centre’s GST rate cut follows a slew of incentives announced in the latest budget to accelerate the adoption of electric vehicles in India, a move aimed at reducing the air pollution in the country.

The hiring of electric buses (of carrying capacity of more than 12 passengers) by local authorities will be exempted from GST. These changes shall come into effect from August 1, 2019.

Read more: GST council meet: Tax on electric vehicles, chargers slashed

"The Government is lately showing very clear intentions of promoting EVs and GST reduction is one such measure in line with the series of actions taken by the government in the last few months. We welcome the seven per cent reduction in GST as it will reduce the gap between the EVs and the IC Engine vehicles,” said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles ( SMEV).

If FAME II was a dampener, the GST reduction is certainly a bright spot in the National EV policy. The EV industry now awaits the corresponding reduction of the 18 per cent GST in the spare batteries as it will help maintain the low running cost of EVs over their lifetime, he added.

Power Minister RK Singh on GST rate reduction on EVs said "I welcome this decision of GST Council. It will go a long way in promoting Electric Vehicles in India and making our cities pollution free."

Country’s second-largest auto maker Hyundai, which recently launched its electric SUV Kona, has also welcomed the government’s GST cut move.

“The tax benefit will help create an ecosystem that will encourage faster mass adoption of EVs in our society,” said S S Kim, MD &CEO, Hyundai Motor India Ltd.

“With the launch of India’s first fully-electric SUV – Kona Electric, Hyundai has already strengthened its commitment to bring ‘Clean Mobility’ Solutions to the Indian customers and we are thankful to the government of India for fulfilling their promise as this strategic decision by GST council will further strengthen the confidence of prospective buyers for electric mobility in future,” he added.

Tarun Mehta, CEO and Founder at Ather Energy said, “The move reduces the upfront cost of buying a vehicle by ₹ 8000 to ₹ 10,000. Compounded by the tax rebates offered in the Union Budget, today electric vehicles are an affordable upgrade from existing internal combustion engine options.”

“Along with the vehicles and chargers, a GST reduction on using public charging network should have also been considered. Though today we offer free charging for all electric 2Ws and 4Ws, consumers will have to begin paying 18% GST in the coming months. Offering preferential electricity rates along with a lowered GST rate, will make owning EVs more affordable and will increase adoption,” Mehta added.

The lowering of the GST rate on electric vehicles (EV) from 12 per cent to 5 per cent is definitely going to give a boost to EV’s in India, said Rahil Ansari, Head, Audi India.

“We are confident that it will motivate customers looking for both entry-level EVs as well as luxury EVs that will enter the market. We are pleased that this coincides with our plans for introducing the Audi e-tron in India by the end of this year,” he added.

Published on July 27, 2019

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