India's GST Council is considering a significant tax increase on premium electric vehicles (EVs) as part of a rate rationalisation exercise. While all EVs currently benefit from a 5% GST rate, a proposal suggests raising it to 18% for four-wheeled EVs priced between Rs 20 lakh and Rs 40 lakh, and to 28% for those costing over Rs 40 lakh. Electric buses will retain the 5% rate. This move aims to balance government revenue with promoting mass EV adoption by differentiating between luxury and affordable models.
The GST Council's rate rationalisation exercise could soon reshape India's electric vehicle (EV) market, with a proposal to raise taxes on premium four-wheelers while retaining relief for buses.
At present, all EVs enjoy a concessional GST rate of 5%, a policy aimed at boosting clean mobility. Howe
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FAQ :
Currently, all EVs enjoy a concessional GST rate of 5%.
The proposal suggests a GST rate of 18% for four-wheeled EVs priced between Rs 20 lakh and Rs 40 lakh, and a steep 28% for EVs costing above Rs 40 lakh.
No, electric buses will continue to benefit from the concessional 5% GST rate.
Officials explained that the current flat 5% rate disproportionately benefits affluent buyers of luxury EVs and erodes government revenues. The aim is to strike a balance between equity and fiscal prudence.
The recommendations will be taken up at the GST Council meeting scheduled for September 3-4 in New Delhi, where the final decision will be made.