Electric vehicle makers seek exemption from GST

Society of Manufacturers of Electric Vehicles wrote a letter to FinMin seeking an exemption

The electric vehicle manufacturers have sought an exemption or a maximum tax of 5% under the GST. Electric Vehicles are being incentivised world over for faster adoption as they have been recognised as a significant contributor to reduction of vehicular pollution, the Society of Manufacturers of Electric Vehicles (SMEV) wrote in a letter to Finance Ministry on Friday.

In order to reduce the price gap between electric vehicles (EV) and fossil fuel vehicles, and to promote adoption of this environment friendly technology, SMEV has worked with almost all the state governments to either exempt electric vehicles from VAT or reduce it to 5% and to bring down excise duty on electric vehicles to 6%, the association said. A total of 80,000 electric vehicles including two wheelers and e-rickshaws were sold in FY16.

The association sought a continuation of the favorable tax structure under the GST regime till the masses realise the economical and ecological benefits of EVs and adopt this 'cleaner' means of transport.  Thus, GST on electric vehicles should ideally be fully exempted or at best be kept at 5%, the body argued. It said that anything more than that will certainly increase the prices of EVs and the EV industry that has just started seeing some green shoots will de-grow and may collapse altogether.