Automobile Companies seek GST Exemption for Electric Vehicles

Electric vehicles have got much fame in recent years due to their economical maintenance and environmentally friendly behavior. Now the manufacturers of electric vehicles have demanded relaxation from GST on the basis of aforementioned facts. Also, the impact of the GST on the auto industry is expected to be fruitful according to leading automakers in India and the on-road price of vehicles will also go down under the GST regime.

The sector is much tensed about the impact of GST on the beneficial cause of these vehicles on the industrial growth while pacing up the rates close to petrol and diesel vehicles, making it even worse for the sector to step above in the line.

The Industry body Society of Manufacturers of Electric Vehicles (SMEV) sent a letter concerned about the issue to the finance ministry and the Empowered Committee of State Finance Ministers for redressal of this doom situation for the sector. The basic demand was to exempt the electric vehicles and to provide an incentive to the public who opt for these vehicles.

SMEV secretary Sohinder Gill said in the letter sent for exemption, “We further submit that given the nascent stage of EV adoption and current low volumes, the financial impact of such an exemption would be significant,” he wrote. ET has seen a copy of the letter.”

FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India) initiative is also in helpless state as Excise duty on electric vehicles currently is 6 percent while most state governments have put lower VAT on electric vehicles, which ranges from nil to 5 per cent but even if electric vehicles are put in the lowest tax slab under GST, the total tax on the product will exceed the quantum of subsidy currently being provided under the FAME.

Gill said, “The lowest tax component under GST is expected to be much more than what we pay currently. Prices of our products will go up, if not exempt, and sales will drop as was seen after the withdrawal of withdrawal of incentive under the MNRE scheme.”