How will GST on Electric Vehicles affect the Automobile Industry of India?

How will GST on Electric Vehicles affect the Automobile Industry of India?

Considering the huge climate change our world is going through, a fair share of contribution comes from the vehicles that we use. To curb the pollution emitted from the vehicles, switching to electric vehicles is a need of the hour. Electric Vehicles do not emit any kind of pollution like any kind of other petrol or diesel vehicles do. Indian Government has realized this and in order to increase the sales of electric vehicles across India, the GST Council of India has decreased the GST on Electric Vehicles from 18 percent to 5 percent.

This move by the Indian Government will surely upscale the growth of the electric vehicles industry and will also push the demand of these vehicles among the customers. The biggest tax reform this country has ever seen was launched on July 1, 2017, under which there are total 5 different tax slabs - No Tax, 5%, 12%, 18%, and 28%. Various goods and services have come under these tax slabs. In this article, we will be telling you about the updates ​GST on electric vehicles​ and what impact wil have in the upcoming days.

What are the new rates of GST on Electric Vehicles?

Before the recent announcements were made, GST on electric vehicles was set at 12% and the electric vehicles chargers were set at 18%. But now the government has decided to move in the GST tax slab of 5% which is surely an encouraging sign for the manufacturers.

These new rates had been demanded by the electric vehicles industry for a long time because there were not many sales of this kind of vehicle.

What will be the various aspects that will be affected by the recent changes in the GST of Electric Vehicles?

There are several things that will surely have an impact on the sales of electric vehicles.

Everybody has been hoping for this after the announcement. Below are some points related to the new changes in the ​GST​ rate on EVs.

● Let me give you a number first. The total share of electric vehicles among all the total two-wheelers sold in India is 0.27%. This is the percentage that the Indian government has been trying to target. Because when the tax will be less, there will be more people who will be encouraged to buy it. ● The individuals who will take the loan amount to buy the electric vehicles will get a tax exemption upto INR 1.5 lakhs. ● All the public authorities will have no tax on buying the electric buses with the capacity of more than 12 seats. ● This move by our government will surely achieve the environmental goal of adding 175GW of the total capacity through renewable energy by 2020. ● After the recent announcement, individuals will have a decrease of around INR 8,000 to INR 10,000 in the price of electric vehicles which will surely increase the sales. ● Electric Vehicles industry has been demanding the tax cut in the batteries of electric vehicles but the GST Council has not made any changes in yet and it is yet in the tax slab of 18%. ● This change will also encourage major vehicle manufacturers like Audi, Mahindra, etc to increase the production of electric vehicles.