Road ministry seeks GST rate cut for hybrid cars and CNG vehicles

Late last month, the GST Council had cut rates on EVs from 12% to 5%

The ministry of road transport and highways has written to the finance ministry, seeking a goods and service tax rate cut for vehicles running on hybrid power and compressed natural gas. Business Standard has learnt that this communication was sent earlier this month, before the announcements by Finance Minister Nirmala Sitharaman to boost economic activity. 

The finance ministry will consider whether to include this in the agenda of the next GST Council meeting, which is expected to be held on September 19 and 20 in Goa. The decision will be with the GST Council.Officials said the finance ministry will consider revenue implications of a rate cut for CNG and hybrid vehicles before making any move. At present, all four- and two-wheelers for commercial or personal use are in the 28 per cent GST bracket, except electric vehicles, bicycles, rickshaw, etc. 

Late last month, the GST Council had cut rates on EVs from 12 per cent to 5 per cent.

Earlier this month, Maruti Suzuki Chairman R C Bhargava had also demanded a tax cut for hybrid and CNG vehicles, amidst slowdown concerns in the auto industry. "Personally, we would like to see GST benefits linked to cleaner cars. The government gave tax cut on EVs but hybrid should be given duty cut. There should be tax cut on CNG vehicles as well," he had told a news channel.

Sitharaman’s announcements on Friday came as a breather for the auto sector, which is facing its worst slowdown in two decades and is hoping for a boost in sales in the festive season.