Finance Ministry unchanged Tax Rates on Hybrid Cars to boost Electric Vehicle Sector

The Finance Ministry’s decision not to propose offering tax concessions to hybrid cars at the upcoming GST council meeting may be viewed positively by Indian automakers such as Mahindra & Mahindra and Tata Motors. The ministry chaired by Nirmala Sitharaman is opposed to offering these tax breaks.

Gadkari urged the Finance Ministry to reduce the GST on hybrid cars to 12%. Reducing the GST on hybrid vehicles would not only promote environmentally friendly transportation but would also assist in reducing pollution levels in the country.

Currently, 28% GST is paid on ICE vehicles, including hybrids, with the addition of a cess. Certain automobiles are subject to a higher tax rate than 40%.

The decision to reduce the GST on hybrid vehicles is consistent with the government’s aim to promote electric and hybrid vehicles as part of its efforts to battle climate change and reduce air pollution. The transport minister emphasized the significance of stimulating the adoption of cleaner automobile technologies in order to build a greener and more sustainable future. There is a tax on hybrid vehicles.

According to reports, the finance ministry may not discuss tax breaks for hybrid automobiles at the upcoming GST council meeting.

This will benefit electric vehicle-focused Indian original equipment manufacturers (OEMs) like Tata Motors and Mahindra & Mahindra. Honda, Hyundai, Toyota, and Maruti Suzuki focus mostly on hybrid vehicles that use both petrol and electric motors.

Currently, sales of their hybrid automobiles are increasing; nevertheless, Gadkari proposed lowering the taxes on these vehicles from 28% to about 5%.

According to sources, the finance minister opposes such action.