Big Move! GST Council Trims Tax on EVs, Chargers to 5%

According to the Finance Ministry statement, these changes will be effective from August 01, 2019.

The GST Council chaired by Finance Minister Nirmala Sitharaman has decided to slash GST rates on all electric vehicles (EVs) to 5 percent from the existing 12 percent and has cut the current 18 percent GST on electric vehicle chargers or charging stations to 5 percent.

In order to provide more environmentally friendly transportation, the Finance Ministry has also given exemption from GST on the hiring of e-buses by local authorities. This exemption is for those buses which can carry over twelve passengers.

According to the Finance Ministry statement, these changes will be effective from August 01, 2019.

Reacting to the news, the Society of Manufacturers of Electric Vehicles (SMEV) has welcomed the government’s move by saying that it is in line with the government’s actions taken to promote EVs in the last few months.

“The Government is lately showing very clear intentions of promoting EVs and GST reduction is one such measure in line with the series of actions taken by the government in the last few months. We welcome the 7 percent reduction in GST as it will reduce the gap between the EVs and the IC Engine vehicles. If FAME-II was a dampener, the GST reduction is certainly a bright spot in the National EV policy,” said Sohinder Gill, director general of SMEV.

While, Panasonic India & South Asia, President & CEO, Manish Sharma said “lack of a 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 percent to 5 percent on electric vehicles and from 18 percent to 5 percent 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.”

Earlier, the budget had provided tax breaks to consumers for buying electric vehicles.

With today’s decision, the government has now walked the talk on supporting EVs and its ecosystem and with all the benefits of the GST cut and tax breaks added, India should now surely be on a path of faster adoption of EVs.

And, we hope that with this move, India’s environment will breathe a little easy too.