New Delhi: The Indian government has announced on Saturday a major reduction in goods and services tax rate on electric vehicles (EV) from 12 per cent down to just 5 per cent.
Moreover, the government also reduced the taxes on EV chargers to 5 per cent from 18 per cent.
The Delhi government has earlier announced several incentives for the electric vehicle (EV) sector including income tax exemption and reduction in custom duties for certain components.
The Modi government wants to encourage domestic manufacturing of EV. Senior officials have also expressed their desire to develop India as a manufacturing hub for electric vehicles and want to encourage their purchase.
GST rate for petrol and diesel cars and hybrid vehicles is already at the highest bracket of 28 per cent.
Industry body Ficci has said rationalisation of GST rates for electric vehicles will provide a big boost to the sector.
To push EV sales, the government on July 5 announced they will offer income tax exemption worth Rs150,000 (about Dh8,000 or $2,170) for electric car buyers.
The government is also encouraging the mass manufacturing of lithium-ion batteries in India.
According to Nirmala Sitharaman, thge finance minister, the income tax exemption will account for a save of Rs250,000 for a customer during the entire period of purchase.
“We want lot develop India as a manufacturing hub for electric vehicles and want to encourage the purchase of these vehicles," said Sitharaman. "The govt will provide income tax exemption of Rs1.5 lakh to the owners of electric vehicles," said Nirmala Sitharaman.
On July 4, the Economic Survey suggested that the government should aim to develop India into a manufacturing centre for EVs and its related components on the lines of the US automotive hub of Detroit.