GST: M&M to phase out hybrid cars, halts production of Scorpio hybrid

GST on hybrid cars is fixed at 43% that puts them in the same league as luxury cars and SUVs

Mahindra and Mahindra Ltd (M&M) is one of the automobile manufacturers that will take the hit of Goods and Services Tax (GST) on hybrid cars, which now suffer a staggering 43 per cent tax under the new regime.

The company has decided to phase out the mild hybrid version of its popular sports utility vehicle (SUV) Scorpio and refrain from manufacturing any new hybrids as the 43 per cent GST rate on such cars has made them unviable.

“While we will be in readiness to launch full-hybrid and mild-hybrid models, we are unlikely to launch them till there are benefits of lower taxation,” said managing director Pawan Goenka, as reported in a news on Live Mint.

Under GST, the tax rate on hybrid cars is fixed at 28 per cent plus a cess of 15 per cent. This put the hybrid cars in the same league with large luxury cars and SUVs that also attracts 43 per cent tax under the new tax regime.

Recently, Toyota Kirloskar Motor Pvt. Ltd also put a halt on hybrid launches. The company had to revise the price of Toyota Camry full-hybrid by increasing the price up to Rs 5,00,000 depending on the state.

Other automobile manufacturers such as Maruti Suzuki has also increased the price of its hybrid models by up to Rs 1,00,000.

While the tax burden on hybrid cars has gone up, the electric cars enjoy reduced tax under GST.

“Hybrids being put in a high GST category is disappointing. It came from nowhere,” said Akshima T. Ghate, associate director, transport and urban governance at the New Delhi-based think-tank The Energy and Research Institute (Teri) to Live Mint.

Even a mild hybrid is more fuel-efficient than conventional vehicles, said Ghate, adding policymakers must remain technology-neutral and create an enabling tax regime that promotes clean technology.