The Society of Indian Automobile Manufacturers (SIAM) has demanded IT deduction, lower GST @5% and exemption of road tax on electric vehicles. The demand has been made by SIAM in a white paper submitted to government of India.
This move is aimed to get government’s assistance in promoting electric vehicles (EVs) in the copuntry. The white paper includes suggestions to reduce GST to 5%, exemption of road tax on electric vehicles besides onetime tax deduction of 30% of the vehicle price for non-finance buyers. This multi-pronged strategy with customer specific policy has been suggested for a successful transition to electric mobility.
The paper suggests that the policy should be aimed at improving affordability and acceptance of electric vehicles. The policy needs to be focused on developing enabling charging infrastructure and encouraging domestic manufacturers besides creating public awareness.
The SIAM white paper says; “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,”
At present, the electric vehicles attract 12% GST. SIAM suggests that the GST rates on the electric vehicles should be brought down to the lowest level of 5% and the road tax should be fully exempted.
The paper also moots onetime tax deduction of 30% of electric vehicle price from the total taxable income of the individual buyers who do not avail any bank finance for the purchase. In order to limit the cut-off price of the electric vehicle to avail such an incentive, SIAM suggests the upper limit to be Rs. 25 lakh.
The suggestion also covers benefit to those buyers who avail bank finance to buy the electric vehicles. The paper suggests that income tax deduction of up to Rs 1 lakh on the interest component for loans taken may be given every year during the tenure of the loan to the electric vehicle buyers who avail bank finance. The benefit suggested is on the lines of government’s scheme on home loan.
SIAM also demands interest rates for the purchase of electric vehicles should be given a favorable treatment similar to priority sectors.
SIAM goes further and suggests that the power tariff for charging electric vehicles could be set at 50% of the existing domestic tariff for home and workplace charging. This would be helpful in enhancing the utilization of electric vehicles as per the white paper.
The paper covers wide ranging suggestions including exemption of toll charges for electric vehicles, parking fee and allowing two wheelers to be used as taxies nationwide.
The government of India is aiming to go for fully electric by 2030 which seems to be very ambitious (may read here). However, the white paper submitted by SIAM has proposed that all new vehicle sales in India to be pure electric by 2047 while the intra-city public transport can be fully electric by 2030. SIAM paper says that the auto industry is aiming at a possible target of 40% of new vehicles sales in the country to be pure electric by 2030.
The government of India may accept at least some of the proposals given by SIAM. The automobile industries and the government of India have to work together to move towards the target of achieving target of clean mode of transport.
If you are planning to buy an electric vehicle, you may wait a little while to avail certain exemptions when the government’s policy is clear.