The automotive industry association SMEV have appealed the government to exempt electric vehicles from the Goods and Services Tax (GST) as these vehicles play a vital role in reducing air pollution. Notedly, SMEV is an association that represents Indian manufacturers of electric vehicles and electric vehicle accessories.
In a letter to Finance Minister Arun Jaitley, Society of Manufacturers of Electric Vehicles (SMEV) has requested that the government should “consider a special treatment for electric vehicles via an exemption from GST when the GST slabs are determined for the automobile sector”.
“Widespread usage of this vehicle is expected to gain significantly in ensuring fuel security, attain saving to the tune of Rs 42,000 crores in crude oil subsidy,” it added.
The electric vehicles are being adopted by several countries due to the concerning environmental issues. According to a last year report, around 80,000 customers adopted e-rickshaws, small electric cars and electric two-wheelers.
The industry is still in an initial stage and it is just the beginning to find its feet in the Indian automobile industry, it said adding, “It is imperative that the favorable tax structure should continue under the GST regime.”
“GST on electric vehicles should ideally be fully exempted or at best be kept at 5 per cent. Anything more than that will certainly increase the prices of EVs and the EV industry that has just started seeing some green shoots will again de-grow and may collapse altogether,” it said.
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Given that the number of electric vehicles sold in the nation is a very small percentage of all automobiles sold, the impact of such an exemption would not be burdensome for the exchequer, it added.