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Considering the impending climate change, one thing is sure that there will be a huge boost in the sales of electric vehicles across the world. As electric vehicles do not contribute anything to the pollution like other vehicles based on diesel and petrol do, they are a perfect choice for transportation purposes. Indian Government realized this and to push the sale of electric vehicles, the GST council has decreased the GST rate on electric vehicles from 18 percent to 5 percent. This move will certainly help in uplifting the lagging electric vehicle infrastructure in the country.
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Considering the impending climate change, one thing is sure that there will be a huge boost in the sales of electric vehicles across the world. As electric vehicles do not contribute anything to the pollution like other vehicles based on diesel and petrol do, they are a perfect choice for transportation purposes. Indian Government realized this and to push the sale of electric vehicles, the GST council has decreased the GST rate on electric vehicles from 18 percent to 5 percent. This move will certainly help in uplifting the lagging electric vehicle infrastructure in the country.
On July 1, 2017, the launch of GST (Goods and Services Tax) was the biggest reform that India has seen since 1990. Through GST, various categories of goods and services come under the 5 major tax slabs of 0% (No Tax), 5%, 12%, 18%, and 28%. Earlier, the GST on electric vehicles was 18% which made the overall cost of them pretty high and thus, there was not much sale. After the reduction in the GST on electric vehicles, the increase is bound to happen because of the many other reasons. In this article, we will tell you about all the things related to GST on electric vehicles.
Various aspects of GST those will impact the sale of Electric Vehicles in India: Do you know that the total number of two-wheelers sold in India was 20,00,000 out of which the share of total EVs was only 54,800 which is only 0.27% of the total two-wheelers sold? The numbers are not substantial enough and that’s why the Indian government has decided to push the sale of electric vehicles through the cut in GST rates. Let’s look at some other points related to it.
Before the recent announcement, the GST rate on electric vehicles was set in the tax slab of 12% and the EVs charger in the tax slab of 18%. That was the biggest hindrance in the sale of EVs. • GST council has fixed the GST rate on both electric vehicles and EV chargers in the tax slab of 5% which is a huge boost for the manufacturers. All these tax rates will be effective from August 1, 2019. • Public authorities can hire electric buses with a capacity of more than 12 people without any tax levied on it. • There will be an upfront difference of ₹8,000 to ₹10,000 on the price of electric vehicles after the recent tax cut.
The individuals who will opt for a loan to buy the electric vehicles can get a tax exemption of upto ₹1.5 lakh on the interest of their loan amount. • Unlike countries like China and Norway, India has a minimal share of electric vehicles in total vehicles. It stands at 0.06%, whereas China has 2% and Norway tops the list with a staggering 39%. After these recent cuts, this percentage is bound to increase. • Electric Vehicle can also help our country in achieving the environmental goal that has our government set up like to add 175GW of total capacity through renewable energy by the year 2020.
There was no cut in the tax slab of the spare batteries of electric vehicles which comes under the 18% tax slab. A change into the 5% tas slab will certainly increase the maintenance and durability of the vehicles. • With the proposed second phase of FAME (Faster Adoption and Manufacturing of Electric Vehicles), effective from April 1, 2019, ₹1,000 crores are allotted for EVs’ charging stations across India.
