Electric vehicle (EV) manufacturers have asked the government to continue the benefits of lower excise and VAT on EVs under the GST regime by keeping it at the lowest slab.
"We submit that such an exemption under GST is an imperative to bring the prices of EVs closer to diesel/petrol vehicles for an accelerated adoption of EVs by the customers leading to great social and environmental benefits," Society of Manufacturers of Electric Vehicles (SMEV) said in a letter to Revenue Secretary Hasmukh Adhia.
Given the nascent stage of EV adoption and the current low volumes, the financial impact of such an exemption would be insignificant, it added.
SMEV said to mitigate the high cost of EVs, the central and state governments have initiated favourable tax policies.
Presently, the excise duty on EVs, including two-wheelers, electric three-wheelers, and small electric cars is 6 per cent.
Various states have also come forward to support deployment of EVs. VAT in most states are between 0-5 per cent, it added.
The industry body asked the Finance Ministry to consider "lower excise and VAT benefit to be extended to this desirable technology of EVs under the GST regime and that EVs should be kept at the lowest slab in the GST regime so that the VAT benefit given by states is not lost."
SMEV said the total sale of EVs incentivised under FAME in FY16 was only 22,000 units, 98 per cent of this being the low speed electric scooters, mainly because of the price barrier.
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