To encourage the uptake of electric transport measures, the Indian government has reduced Goods and Services Tax (GST) on EVs, chargers and electric bus hire significantly.
GST for electric vehicles will fall from 12 per cent to 5 per cent, on EV chargers from 18 per cent to 5 per cent. Also, the hiring of electric buses (with a capacity of more than 12 passengers) by local authorities will be exempted from GST. The new rates will come into effect in a few days on the 1 August.
Meanwhile, petrol and diesel-based automobiles will be charged GST at a rate of 28 per cent. Despite New Delhi announcing its climate goal of reducing emissions by 33-35% by 2030 from 2005 levels, the share of electric vehicles in India is currently negligible.
In response to the changes in GST, Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV) said, “the Government is lately showing evident intentions of promoting EVs and GST reduction is one such measure in line with the series of actions taken by the government in the last few months.”
Finance Minister Nirmala Sitharaman, announced in her maiden budget earlier this month that the government will provide an additional income tax deduction on the interest paid on loans for the purchase of EVs.
The government wants to accelerate the production of electric vehicles as well as its adoption by consumers through incentives. This has included draft plans to waiver registration fees for EVs. Much of this activity has been precipitated by Niti Aayog, a think tank funded by the Indian central government that has made a number of recommendations, for example, that only electric vehicles should be permitted for registration from 2030 onwards. The government has already announced plans to only register electric tricycles or rickshaws in India from April 2023 and electric two-wheelers only from April 2025.
Earlier this month, the Indian government heralded their aim of promoting the electrification of public and shared transport in the second phase of the FAME India 2 program.