GST on EV Chargers Brought Down to 12 Percent

The GST council held on June 21, 2019, has approved the reduction of GST on EV chargers to 12 percent, down from 18 percent previously.

The Goods and Services Tax (GST) council held on June 21, 2019, has approved the reduction of GST on electric vehicle (EV) chargers to 12 percent, down from 18 percent previously.

Led by Finance Minister Nirmala Sitharaman, the council sees the move as a boost for both manufacturers and consumers, and hence promoting the e-mobility segment. The decision definitely comes as a relief for manufactures of electric vehicle chargers, however, the impact on customers as well as EV manufacturers are not expected to be significant.

For manufacturers, there is still one kind of charger that is being used within the vehicles, and that is still taxed at an 18 percent rate. Thus, not offering any respite. Moreover, customers also pay a fixed tax for using charging services, which again is still at 18 percent.

The automobile sector has sought urgent measures to boost demand, after recording the steep decline in sales. Electric vehicle sales reached 7.5 lakh units in Financial Year (FY) 2018-19, as it has registered a growth of record 31.8 percent. Further to this, SMEV’s analysis reveals that post implementation of the FAME II scheme there has been a drastic brought down in the sales of electric vehicles for the month of April of current financial year due to lack of incentives for private EVs.

The decision that could perhaps greatly influence the e-mobility sector in the country is if the GST councils proposal to reduce the GST on electric vehicles is approved. A decision that was expected at the end of the latest council meeting, however, that proposal is still under consideration.

Recently, we reported that India may cut the GST on electric vehicles to 5% from 12% to provide a stimulus to the sector that’s a high priority for the current government. The tax cut demand is becoming stronger with each manufacturer investing in, as the subsidies under FAME 2 have been limited to commercial vehicles only. Manufacturers believe that will not be enough to create a robust EV market.

Lower duties are expected to encourage global manufacturers to invest in India’s planned shift to electric vehicles in order to try and bring down pollution levels.