GST Council reduces rate on Electric Vehicles by 7%

The GST Council has decided to reduce GST Rate on Electrical Vehicles from 12 per cent to 5 per cent.

In its 36th meeting today in New Delhi, the Council also decided to reduce the rate on Electric Vehicle Chargers from 18 per cent to 5 per cent. The new rates will come into effect from the 1st of next month.

The Council also approved an exemption from GST on the hiring of Electric Buses by local authorities.

Finance Minister Nirmala Sitharaman held the meeting through video conferencing. This is the first GST Council meeting after the presentation of Union Budget in Parliament on 5th of this month.

In its last meeting, the GST Council had approved the use of Aadhaar by businesses to register under GST and the imposition of a penalty of up to 10 per cent on entities not passing on benefits of GST rate cuts to consumers.

The auto industry today welcomed the reduction in GST on Electric Vehicles (EVs) and chargers, saying it will help in creating an ecosystem that will encourage faster mass adoption of eco-friendly mobility.

While terming the step as yet another bold move, the manufacturers, specially electric two-wheeler makers, sought similar reduction of 18 per cent GST on spare batteries, claiming it would help maintain low running cost of EVs over their lifetime.

Society of Manufacturers of Electric Vehicles hailed the development, saying it is in line with the government’s steps to promote eco-friendly mobility, even as it sought a similar cut in spare batteries.

SMEV Director General Sohinder Gill said with the reduction in GST, the gap between prices of EVs and internal combustion engine vehicles will also be reduced. This will play a part in faster adoption of electric mobility.