Electric vehicles makers welcome GST reduction to 5 pc

The Society of Manufacturers of Electric Vehicles (SMEV) on Saturday welcomed the reduction of GST on electric vehicles to five percent, saying it is in line with the government's steps to promote eco-friendly mobility, even as it sought a similar cut in spare batteries.

SMEV Director-General Sohinder Gill said with the reduction in GST, the gap between prices of EVs and internal combustion (IC) engine vehicles will also be reduced, and will thus play a part in faster adoption of electric mobility.

"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," Gill said in a statement.

"We welcome the seven percent reduction in GST as it will reduce the gap between the EVs and the IC engine vehicles," he added.

Gill said if FAME-II was a dampener, the GST reduction is certainly a bright spot in the national EV policy.

"The EV industry now awaits the corresponding reduction of the 18 percent GST in the spares batteries as it will help maintain the low running cost of EVs over their lifetime," he said.

The high-powered GST Council on Saturday decided to reduce the tax rate on electric vehicles (EVs) to five percent from the existing 12 percent, effective from August 1.

It also slashed the GST on EV chargers from 18 percent to five percent.

The Centre has also approved Rs 10,000 crore to encourage faster adoption of EVs in the country under the FAME II scheme, which aims to encourage faster adoption of such vehicles by right incentives and charging infrastructure. The meeting, chaired by Finance Minister Nirmala Sitharaman, was held via video conferencing.

The GST Council, headed by the Union Finance Minister, has State Finance ministers as members.

It also took certain decisions regarding changes in GST law.

(Edited by Evelyn Ratnakumar)