High tax on hybrids signals change

New Delhi, May 19: Auto industry on Friday termed the clubbing of hybrid vehicles along with luxury cars in GST rates as environment unfriendly and regressive step, saying it went against plans to promote green vehicles.

Under the GST rates announced on Thursday, large cars with engine greater than 1,500 cc and SUVs with length more than 4 metres and engine greater than 1,500 cc are slated to attract 15 per cent cess over and above peak rate of 28 per cent.

Hybrid vehicles will also fall in the category under GST. In comparison, tax on electric vehicles has been kept at 12 per cent. At present hybrid vehicles attract excise duty of 12.5 per cent, similar to the ones on entry level small cars such as Tata Nano or Maruti Alto.

Some of the popular hybrid vehicles sold in India are Camry Hybrid and Prius from Toyota and Honda Accord. These are priced between `31.98lakh to `38.96 lakh.

“This is a very environment unfriendly, regressive tax rate as far as hybrid vehicles are concerned. It goes against the government’s drive to promote eco-friendly cars,” Toyota Kirloskar Motor vice chairman Shekar Viswanathan told PTI.

He said this was not expected from this government, which has been very forward looking otherwise. “Hybrids and electric vehicles feed from the same ecosystem and the least that they could have done was to keep the rate on hybrid vehicles at peak rate of 28 per cent without the cess,” he said.

Expressing similar sentiments, Maruti Suzuki India chairman R.C. Bhargava said: “Putting hybrid cars at par with the luxury cars is against the stated government policy to promote use of such vehicles. We are going to seek clarity on the matter”.

He further said, “We believe it as an inadvertent error on the part of the government, unless they have decided to change the policy on promoting such cars in the country”.

SIAM secretary general Vishnu Mathur too expressed similar views on the tax rate.

Putting hybrid cars at par with luxury cars is against the stated government policy to promote use of such vehicles. We are going to seek clarity on the matter

—R.C. BHARGAVA