To promote electric vehicles (EVs) in India, auto industry body SIAM has suggested reduction of Goods and Services Tax (GST) on such vehicles to 5% besides giving one-time Income Tax (I-T) deduction of 30% of vehicle price for non-financed buyers. In a white paper submitted to the government, the Society of Indian Automobile Manufacturers (SIAM) also mooted exemption from road tax for EVs while stating that a multi-pronged, segment and customer-specific policy will be needed for a successful transition to electric mobility.
The policy should collectively aim at improving affordability and acceptance of EVs by bridging viability gap; enabling charging infrastructure build-out; encouraging domestic manufacturing and creating public awareness besides providing other enablers, it said.“Demand incentives or cash subsidies can at best be a short-term measure to kick-start the process. However, tax rebates and other fiscal and non-fiscal measures can be sustained over a longer term and will have a greater impact and outreach,” the paper said.On specific fiscal measures, SIAM said GST rate for all EVs may be brought down from 12% to 5% and road tax be fully exempted.For EV buyers, the paper proposed a “one-time Income Tax deduction of 30% of vehicle price from total taxable income to individual purchasers, who have not availed any bank finance for the purchase“.
To determine the cut-off price for such an incentive, a maximum vehicle price of ₹25 lakh (the same used to define SUVs as per SIAM classification) may be considered, it added.
The paper further said for individuals who had availed bank finance to purchase a personal EV, “Income Tax deduction of up to ₹1 lakh on the interest component for loans taken may be given every year during the tenure of the loan, like government’s scheme on home loans“.