Close on the heels of Union Budget providing tax relief for buying electric vehicles, the GST Council in its 36th meeting on Saturday cut the tax on electric vehicles (EV) from 12 percent to 5 percent effective August 1, 2019.
The Council has also slashed rate for EV chargers from 18percent to 5 percent making electric vehicle affordable for the buyers.
The twin rate cuts are set to further boost the EV sector.The Budget on July 5 had proposed Income Tax deduction of Rs 1.5 lakh on theinterest paid on the loans taken to purchase electric vehicles.
"The proposed reduction in the GST rates on e-vehiclescoming on the back of the recent customs duty reduction on EVs and partssignifies the governments resolve to go green and reduce the carbonfootprint," said M.S. Mani, Partner, Deloitte India.
The Council chaired by Union Finance Minister NirmalaSitharaman has also exempted hiring of electric buses (of carrying capacity ofmore than 12 passengers) by local authorities from the Goods and Services Tax(GST).
This is a major push to the electric vehicles which has sofar seen lukewarm response due to high ownership cost and insufficientinfrastructure in the country. Not surprisingly, the share of electric vehiclesout of total annual vehicle sales in the country is less than 1 per cent.
However, the Modi government is committed to transform thetransport sector by promoting the use of green cars and bikes.The government's think-tank Niti Aayog has putforward plan to shift to e-mobility for two-wheelers (below 150cc) andthree-wheelers by 2025.