Call for Lower GST on EV Batteries and Charging Infrastructure to Boost Adoption

There is a strong emphasis on reducing the Goods and Services Tax (GST) on electric vehicle (EV) batteries and charging infrastructure in India to encourage adoption. The current 18% GST applied to EV batteries and services is seen as a barrier to wider acceptability, prompting calls for reconsideration of these tax rates by the concerned authorities.

It has been recommended that GST on charging services also warrants attention, as categorizing charging services incurs a higher tax burden. Communication has reportedly been made to the relevant authorities seeking evaluation in this regard, as changes in taxation could significantly boost EV penetration in the country.

GST Rate: GST Council’s domain

While taxation decisions fall under the GST Council’s domain, it has been advocated that the higher tax levies on EV-related services need revision. The government has been encouraged to prioritize a complete transition of the two-wheeler segment to EVs, eliminating the reliance on non-electric counterparts. Additionally, a proposal has been made for 100% electrification of three-wheelers in select cities as a pilot initiative.

The electrification of trucks has also been highlighted as a crucial area of focus, given their significant diesel consumption. Proposals include converting highways into EV-friendly corridors equipped with multiple charging stations. Industries such as mining, cement, and steel, which deploy large fleets of trucks, have been identified as key targets for large-scale electrification efforts.

The Centre is also reportedly preparing plans to make all ambulances in the country electric. This initiative aligns with the broader push for EV adoption and will be supported by government funding to encourage the industry to develop advanced electric ambulances.

This push for lower GST rates and improved EV infrastructure aligns with the government’s vision of strengthening the domestic EV ecosystem. Efforts such as production-linked incentives (PLIs) and the INR 10,090 crore PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme are pivotal to this strategy. According to forecasts, the Indian EV market is expected to grow into a $110.74 billion industry by 2029 a compelling reason for such measures to be implemented.

The drive for favorable taxation and infrastructure development reflects the country’s determination to reduce its carbon footprint and advance innovation in the EV sector.