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Reduction of GST on Electric Vehicles

The goods and services tax on electric vehicles is to be reduced to 5% by this week, the government has confirmed.

The goods and services tax( GST ) on electric vehicles is to be reduced to 5% by this week, the government has confirmed.

A senior official said that discussion on the proposal will take place on July 25th, by a specially convenes GST council meeting which will be held via a video conference. The committee of officials has unanimously decided that the GST rates should be reduced from 12% to 5% on EV’s.

Few states had concerns regarding this move but the committee has backed it. The NDA government, led by Narendra Modi has identified electric vehicles as a part of its big plan to promote cleantech and cut dependence on fossil fuels. In order to promote Evs, the Union budget has announced various measures which include tax incentives for manufacturers and buyers.

Those buying electric vehicles will get an additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to buy EVs.

Along with the GST on vehicles being dropped a proposal to cut GST on chargers for e-vehicles to 12% from 18% has also been approached. The proposal was discussed at the last meeting of the GST Council but it was sent to the fitment committee for examination, the person added.

Official think tank Niti Aayog has prepared a roadmap that envisages all vehicles sold after 2030 being electric. The roadmap lays down that all two-and three-wheelers should go electric from 2023 and all commercial vehicles from 2026. 

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