Following the announcement of GST rates for the automotive sector, Indian electric vehicle (EV) industry representatives are of the opinion that the sector deserved better, given the dire need to accelerate EV ownership and usage in the country.
EVs have been placed in the 12 percent tax slab and batteries at 28 percent in the reformative GST regime.
According to Autocar India, the new and simplified tax structure has largely aimed at bringing about a positive impact to the automotive sector. It has cut down the existing Excise Duty (ED) and State taxes, cumulatively ranging between 11 to 55 percent across vehicle segments, to an average rate of 28 percent GST, along with an additional cess of 15 percent in the passenger vehicle segment.
Before GST kicked in, electric vehicles (EVs) had 6 percent ED and state VAT varying between 5 to 15 percent, taking the total applicable tax in the range of 11 to 21 percent. GST now brings EVs into the flat 12 percent tax slab across the country, keeping the rate at the lowest in the entire automotive space. However, the new rate, even though lower than the previous structure, doesn’t guarantee the final implications on EVs as being simply positive.
When compared to the pre-GST phase, a number of states, including Rajasthan and Uttarakhand, had exempted these zero-emission vehicles from any tax whatsoever. Domestic EV makers are now of the opinion that, to promote EVs and their ownership strongly, the government should have placed these vehicles in the base 5 percent slab or even exempted them altogether, as opposed to the middle-path 12 percent slab.
GST puts batteries into the highest 28 percent slab, moving them up from the prevalent state tax rates of 5 to 15 percent, which could prove to be a roadblock when it comes to pricing EVs affordably.
