NEW DELHI: The GST Council will consider reduction of tax on Electric Vehicles (EV), Minister of State for Finance Anurag Thakur informed Lok Sabha on Monday.
“The matter has been placed before the GST Council and will be considered. As of now, it is pending before the council,” Thakur said while replying to a question from BJP member Varun Gandhi during the Question Hour.
Around the GST Council meeting held on last Friday, it was highly anticipated that the council would bring down GST on EVs to 5 per cent from 12 per cent in a bid to encourage adaptation of the environment-friendly vehicles. However, the council forwarded the matter to the fitment committee for further consideration instead.
The calls for lowering GST rates on EVs were intended at encouraging domestic and international investments to create an EV-compatible infrastructure in India. The government think tank, NITI Aayog, has proposed phasing out fossil fuel-based autorickshaws by 2023, and scooters and motorcycles (150 CC) by 2025. It has also proposed to go all electric by 2030.
The proposal to go all electric, however, hasn’t gone down well with automobile manufacturers, with two of the leading players - Bajaj Auto and TVS Motors - calling the transition completely uncalled for. The two companies said that the policy has not been made with adequate study and diligence.
“This is not like Aadhaar, not software and print cards. You have to set up a whole supply chain, and migrate from the current supply chain,” Venu Srinivasan, chairman and managing director of TVS Motor Co, told PTI.
Asserting that a “black or white, zero-one change” is not possible “with 20 million vehicles, $15 billion in sales, one million employees,” he said that “the whole thing is not thought through. I hope saner thoughts will prevail and people will think through the real implications of all this”.
In a similar vein, Bajaj Auto managing director Rajiv Bajaj said that they believe “100 per cent transition is completely uncalled for”. Earlier, Bajaj had asserted that the move was impractical and ill-timed, considering the scale involved when stakeholders do not have any meaningful experience with any of the pieces of the EV puzzle.