GST Council Sanctions Reduction of GST on EV Chargers to 12 Percent

The Goods and Services Tax (GST) has announced that it has permitted the reduction of GST on electric vehicle (EV) chargers to 12 per cent, down from 18 per cent earlier.

Steered by Finance Minister Nirmala Sitharaman, the council sees the move as a boost for both manufacturers and consumers, and hence encouraging the e-mobility sector. The decision certainly comes as a relief for manufactures of electric vehicle chargers, though, the impact on customers as well as EV manufacturers are not projected to be substantial.

For manufacturers, there is still one kind of charger that is being used within the vehicles, and that is still taxed at an 18 per cent rate. Thus, not proposing any breather. Furthermore, customers also pay a fixed tax for using charging services, which again is still at 18 per cent.

The automobile sector has pursued urgent measures to boost demand, after recording the sharp decline in sales. Electric vehicle sales reached 7.5 lakh units in Financial Year (FY) 2018-19, as it has registered a growth of record 31.8 percent. Further to this, SMEV’s analysis reveals that post implementation of the FAME II scheme there has been a drastic brought down in the sales of electric vehicles for the month of April of current financial year due to lack of incentives for private EVs.

The decision that could possibly influence the e-mobility sector in the country is if the GST council’s proposal to reduce the GST on electric vehicles is sanctioned. A decision that was projected at the end of the latest council meeting, though, that proposal is still under deliberation.