Electric Vehicles: GST Reduced, Buyers to Get Tax Benefit By CIOReviewIndia Team

Electric Vehicles: GST Reduced, Buyers to Get Tax Benefit

CIOReviewIndia Team | Monday, 29 July 2019, 13:08 IST

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Electric VehiclesFinance Minister Nirmala Sitharaman unveiled a budget aimed at boosting infrastructure and foreign investment. The budget has been presented with a 10-year vision in mind and has proposed an array of measures to boost electric vehicles market growth under Automobile sector. 

Presenting the Budget for 2019-20, Finance Minister Nirmala Sitharaman said that the government has already approved Rs 10,000 crore for FAME II scheme on April 1, 2019 to encourage faster adoption of Electric Vehicles by providing right incentives and charging infrastructure. Finance Minister also said that there will be a comprehensive restructuring of National Highway Program to ensure creation of National Highway Grid of desirable capacity as well.  

Electric Vehicles have been increasingly making the headlines in the recent months. The key factors pushing the growth of EVs are lesser impact on the environment, cost efficiency, low maintenance and much more. Sitharaman said, the country must emphasize the usage of Electric Vehicles as these represent the next generation in sustainable mobility. She also stated that appropriate policy measures are needed to lower the overall lifetime ownership costs to make them an attractive alternative to consumers.

The government of India has already moved the GST council to lower the GST rate on EVs from 12% to 5%. “To make vehicle affordable to consumers, our government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase EV,” Sitharaman said. “This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase an electric vehicle,” she added.

Rs 10,000 crore FAME-II scheme makes strong and Plug-In Hybrids under Rs 15 lakh eligible for an incentive of Rs 20,000. Though small as compared to what EVs are eligible for, this is expected to create a momentum. Martin Schwenk, MD & CEO, Mercedes-Benz India welcomed the government’s vision of achieving 3 trillion dollar economy and becoming the 6th largest economy in the world.

Overall the Indian Automobile industry has accepted the challenge to promote EVs. However, the Automobile manufacturers are disappointed that the older polluting vehicles have not been addressed in the incentive scheme.

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