India may cut the GST on electric vehicles to 5% from 12% to provide a stimulus to the sector. According to an official the GST Council is set to take up the proposal at its next meeting. Lower duties are expected to encourage global manufacturers to invest in India’s planned shift to electric vehicles in order to try and bring down pollution levels.
Punjab had written to the Centre seeking a review of tax rates. Tackling Slowdown, the state has sought new rates for automobiles, textiles, micro, small and medium enterprises (MSMEs) and real estate to provide a boost to the economy, which has slowed to the lowest in five years in FY 2018-19.
The automobile sector has sought urgent measures to boost demand, after recording the steepest decline in sales in 18 years. Passenger vehicle sales fell by 21% in May, prompting closure of dealerships and plant shutdowns. The RBI consumer confidence index, based on a survey in 13 cities, fell to 97.3 in May, indicating pessimism about jobs and prices.
Electric Vehicles Policymakers favour incentivising electric vehicles in line with the government’s long-term strategy. The Niti Aayog has prepared a roadmap that lays down that all two-and three-wheelers should go electric from 2023 and all commercial vehicles from 2026. Experts said tax cuts would encourage manufacturing. Under this, customs duties on EVs are proposed to be gradually increased.
