Electric vehicle (EV) manufacturers on Friday hailed the GST Council’s decision that EVs with or without battery packs will now be taxed at 5 percent.
At present, e-vehicles are taxed at 5 percent while lithium-ion batteries are taxed at 18 percent.
The decision was taken at the GST Council’s 47th meeting in Chandigarh on June 28-29, chaired by Union Finance Minister Nirmala Sitharaman.
“Electric vehicles, whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5 percent,” a ministry statement read.
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Akshit Bansal, CEO of electric vehicle (EV) charging network provider Static, said that the government has declared a clear intention to boost domestic EV adoption and usage by making the industry eligible for a concessional GST rate of 5 percent.
“This move will encourage the industry to pass on more cost benefits to the users and also lend a necessary push to people who are still looking for incentives to adapt to the EV way of life,” Bansal told IANS.
“I welcome this move of industry-wide GST reduction to 5 percent and thank the government for helping us bridge the gap between the possible adoption of EVs and a real-life rise in its adoption,” he added.
Battery price makes up as much as 50 percent of an electric vehicle’s cost.
In 2018, the GST rate on lithium-ion batteries slashed from 28 percent to 18 percent.
In December last year, then NITI Aayog CEO Amitabh Kant said the government was working on reducing GST on EV batteries.
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