GST revision leaves electric vehicle manufacturers unimpressed

Business Tech

Electric car manufacturers are unhappy about the GST council’s decision to retain automotive car batteries in the highest tax slab.

The revision of GST Tax rates in November has retained automotive batteries in the highest tax slab of 28 per cent. This is 18 to 23 per cent over the pre-GST state tax rates of 5 to 15 per cent that was prevalent across the country.

This could prove to be a roadblock for the government’s plans to sell only electric vehicles in India using a battery swapping model. In June this year, the Ministry of Power had announced they would introduce electric vehicles in a big way.The announcement also stated that by 2030 not a single petrol or diesel car would be sold in the country.

“The key idea here to separate EVs from their single most expensive component, the batteries. And the batteries need to be smart, small, and swappable. Batteries will be standardized so that the drained ones can be swapped with fully charged ones through a network of swapping stations. We can start buying EVs without the batteries driving down the cost of an EV. With improvements in efficiency, the cost per kilometre can be driven down to that of a combustion engine vehicle”, explained Ashok Jhunjhunwala, an advisor to the power ministry.

With batteries at the heart of the government’s plan for EV adoption, the high tax rates on automotive batteries could be a strong deterrent. Electronic vehicle manufacturers are dissatisfied with the GST council’s decision to put automotive batteries in the highest tax slab.

“Lithium batteries usually need to be sold separately from the electric two-wheelers to give a choice of batteries at the point of sale. Such batteries have become significantly costlier because of 28 per cent GST on them, leading to a big dampener for the electric two-wheeler customers,” said Sohinder Gill, the head of the Society of Manufacturers of Electric (SMEV)
“SMEV is requesting uniform GST rate for EVs (electric vehicles) and batteries at point-of-sale,” he added.

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