The high-powered GST Council on Friday did not reduce the tax rate on electric vehicles as anticipated. There were expectations that the tax on EVs would be reduced to 5 per cent from 12 per cent to provide much-need stimulus to the green mobility sector. The matter has been forwarded to the fitment committee for further consideration.
The idea behind lowering GST rates on electric vehicles is to encourage domestic and international manufacturers to invest in India to create EV-compatible infrastructure in its mission to achieve its target to have fully electric public transport system by 2030.
As per Niti Aayog's EV policy laid out in 2017, the country aims to phase out fossil-fuel-based auto-rickshaws by 2023, and scooters and motorcycles (150cc) by 2025. By 2030, India aims to complete at least 40 per cent electrification in private transport. To promote electric and hybrid vehicles, the government had also launched Rs 10,000 crore FAME II incentive scheme, which has been operational for the next three years since April. It is the expanded version of the present scheme FAME India I (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME), which was launched on April 1, 2015, with a total outlay of Rs 895 crore.
Under FAME II, the government is planning to provide several incentives to three-wheeler and four-wheeler companies, but these will be applicable mainly on vehicles used for public transport or commercial purposes. However, in the two-wheeler segment, the focus will be on private vehicles.
Meanwhile, other agendas tabled for the 35th GST council meeting included tax evasion, extending the tenure of the National Anti-profiteering Authority (NAA), electronic invoices (e-invoices) system, the revenue position of states, the new return filing system, setting up an appellate tribunal for north-eastern states and another one for all UTs, among others.
(Edited by Manoj)