GST On Electric Vehicles And Chargers Reduced From 12% To 5% - What Is The Industry Saying

This Reduction on Tax is a part of the Government’s Electrification Strategy with an aim to reduced dependence on fossil fuels for mobility.

Key Points :

  • Electrical Vehicles from 12% to 5%
  • EV Chargers from 18% to 5%
  • The hiring of Electric Buses by local authorities Made Tax Free

The Goods and Services Tax (GST) Council, has decided to reduce tax rates on electric vehicles and Electric Vehicle chargers from 1 August. The Reduction in taxes has gone from 12% to 5% on vehicles and from 18% to 5% on electric vehicle chargers.

The GST Council also made hiring of electric buses by local authorities tax free. The exemption is applicable on buses with a carrying capacity of more than 12.

This Reduction on Tax is a part of the Government’s Electrification Strategy with an aim to reduced dependence on fossil fuels for mobility. 

India Auto Industry leaders and EV manufacturers reacted positively. 

Mr. Rahil Ansari, Head, Audi India 

While these are great steps for the future, short-term measures supporting the overall industry, also the luxury segment, are required by the Government. All players are struggling with declining sales which in turn is leading to production cuts and may lead to job losses, too. The draft notification on hiking registration for ICE vehicles is detrimental to the overall development. It’s high time that short term actions are being taken by the Government to help the industry overcome this phase and contribute in the long run. We need support not penalties.

Mr Rajan Wadhera, President, SIAM  

Government’s vision of increasing electric mobility in the country has been acknowledged by GST council by significantly reducing GST rate on electric vehicles. We are thankful to the GST council for accepting these recommendations which were proposed by SIAM in our white paper which was released last year to promote the growth of electric vehicles in India.

Sulajja Firodia Motwani, Founder and CEO of Kinetic Green and Vice Chairperson, Kinetic Group

GST reduction on EVs from 12% to 5% is a welcome move to promote usage of EVs in the country. It gives clear direction to the industry also for shifting to EVs in times to come.

Tarun Mehta CEO, Co-founder- Ather Energy

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. 

As a manufacturer, we would like the Centre to review the current taxation framework applicable on raw material and the final product. There is an inherent inverted duty structure as the GST input on raw material and other overheads are on average of 18 % wherein the output is now going to be pegged at 5%. This structure results in significant working capital blockage. Even with the existing GST inverted duty refund framework in place, there is working capital blockage on the overheads and capital investments. A comprehensive GST refund structure of electric vehicle manufacturers or a reduced GST liability on the raw material should be assessed for seamless cash flows in the long run

Mr. Pankaj Tiwari, India Business Head - Avan Motors

the GST Council's decision to reduce the rate on electric vehicles and chargers to 5 percent has clearly established the Government's intention of a long term view towards the segment. Reciprocating to these announcements, we  assure of our commitment aligned with such initiatives by bringing state of the art products and technologies to the market.

Mr Chandrajit Banerjee, Director General, CII 

Reduction of GST rates on Electric Vehicles by GST Council is a landmark move and comes as a shot in the arm for the automobile industry, stated Mr Chandrajit Banerjee, Director General, Confederation of Indian Industry. The GST Council has reduced GST rates on Electric vehicles from 12% to 5% and on charging stations from 18% to 5%. This was much awaited and will boost the market of non-polluting vehicles, for which industry was pushing since long. Reduction of GST rates on E-Vehicles shall give a fillip to the production of the Automobile sector and shall benefit the consumers significantly.

Sudeep Narayan, Director, PR and Corporate Communication, Volvo Car India

The reduction of GST rate on electric vehicles and chargers to 5% is a positive sign to encourage the adoption of electric mobility in the country. However, EVs and related infrastructure go hand-in-hand. Setting up of charging stations should also be fast tracked at the same time. It would be good if the construction industry helps in setting up the charging points not just at commercial spaces, but at residential areas too.

Sohinder Gill, CEO of Hero Electric India

The Industry and the Government must work together to create price parity at-least for 2 to 3 years so as to trigger mass adoption.  Some of the steps requested by SMEV are Subsidy on all the EVs should be INR 20000/Kwhr of battery as it is for the buses; financing by Public sector banks; mandating businesses that use polluting vehicles for their operations to switch to electric and a major awareness campaign on the benefits of EVs by the Govt under "Swachh Bharat" initiative. The GST on the spares batteries is still 18% and that should also be brought down to 5% to ensure that the EV users continue to enjoy the low running cost advantage.

Nagesh Basavanhalli, MD & CEO, Greaves Cotton:

The reduction in GST is on expected lines and a logical extension of the government's electric push. This along with other EV friendly measures will push the industry onto fast lane and promote greater adoption by end-user as means to affordable last-mile mobility. We look forward to India's rise as an EV manufacturing hub and we will continue to play an important role in this transformation.

Mr. Manish Sharma, President & CEO, Panasonic India & South Asia

Lack of proper infrastructure has been a major impediment in ensuring wide-scale adoption of EV’s in India. The emphasis laid by the government to improve the electric mobility ecosystem in the country has seen yet another push with its decision to lower the GST rates from 12% to 5% on electric vehicles and 18% and 5% on the charging stations. This will not only provide the necessary impetus to EV adoption but also facilitate in strengthening the EV charging infrastructure in the country. The decision to exempt GST in the hiring of electric buses of carrying capacity of more than 12 passengers by the local authorities will give the necessary thrust in raising more awareness about EV’s. The landmark announcements will also help lay the foundation in creating a manufacturing ecosystem for the EV sector in India.

Mr. Paritosh Dey, Co-founder & CEO, Benling India Energy & Technology Pvt. Ltd

We welcome the GST Council's decision to reduce GST rates for electric vehicles and EV chargers. This will provide a much-needed boost to the EV sector in India. The move goes parallel to the Government's vision to roll out an all-electric fleet by 2030 and to make the non-fossil fuel vehicles beneficial to buyers. The announcements will catalyse India’s journey to electrification and will be beneficial for both, the e-mobility industry as well as consumers looking to make the shift to electric vehicles.

Amit Raj Singh, Co-Founder, Gemopai Electric 

We at Gemopai, welcome the Government's move on reducing the GST on EVs to 5% from 12%. This move will increase the confidence of potential customer and help accelerate the adoption of EVs in the country. This is also a great booster for all manufacturers aligned to make electric mobility a reality and India pollution free.

As a catalyst of growth of EVs in india, Gemopai will pass this entire benefit to the customer on our existing and two new models, that will be launched later this month.

Updated with Quotes 


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