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Government to exempt registration fees on EVs, could reduce GST

Government to exempt registration fees on EVs, could reduce GST

Snapshot: The government of India is planning to exempt registration fees on electric vehicles and reduce GST cess on electric vehicles to promote electric mobility.

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  • The registration charges on electric vehicles are likely to be waved off.
  • The exemption of registration charges will apply on EVs across categories.
  • The charges are proposed to be waved off during issuance and renewal of registration certificate.
  • The government has also proposed to reduce GST on electric vehicles from 12 to 5 per cent.
  • It also plans to reduce GST levied on electric chargers from 18 to 12 per cent.

 

The government of India has proposed to exempt registration charges on electric vehicles to push sales of electric vehicles in the country. With the government’s aim to adopt electric mobility by 2030, this seems to be a right move in promoting electric mobility. The exemption will be applicable to electric vehicles across categories in India. A draft notification was issued by the Ministry of Road Transport and Highways for review or comment from the stakeholders.

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The proposal advises amendment of Rule 81 of the CMVR, which will allow exemption of registration fees both in case of issuance and renewal, for vehicles running on battery. Drafts for stern rules for promoting electric mobility were prepared by the Niti Ayog recently. The entity has suggested directing major fleet operators in India such as Ola and Uber to include around 40% electric vehicles in their fleet.

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The Minister of road transport and highways, Nitin Gadkari, is said to reach to a conclusion only after consulting stakeholders. According to Gadkari, the transition to electric mobility should happen gradually. He suggests, that auto giants should adopt new technologies and plan production accordingly. In addition to exempting registration charges, the government of India is also planning to reduce goods and services tax (GST) cess levied on electric vehicles. Currently, the GST charged on EVs is 12 per cent, however, the government plans to bring it substantially down to 5 per cent.

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The proposal also suggests reducing GST on chargers which currently attracts 18 per cent tax to 12 per cent. Not only this, but the government also plans to reduce GST on ticket fares on electric buses. These measures may help increase demand which will eventually help increase the production of electric vehicles in the country and reduce the use of fossil fuels. Currently, EVs also benefit from compensation which falls in the bracket of 1 to 22 per cent. The basic custom duty on import of EV parts was also reduced to encourage production in the country. As for the reduction in GST cess on EVs, the GST council will discuss it in the next meeting.

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