Carmakers want 5% GST to push electric-vehicles

Carmakers have sought a number of incentives to push electric vehicles (EVs) — a 5 per cent goods and services tax (GST), income-tax (I-T) benefits, waiver on road tax and toll charges, free parking, and a 50 per cent reduction in power tariff for charging these vehicles.

The domestic automobile industry, which has slowly but surely started moving towards electric mobility, has said it will take 30 years to achieve full electrification in new sales.

In a white paper submitted to the government, industry body the Society of Indian Automobile Manufactures (Siam) said it aims to convert all new vehicles to electric ones by 2047. The government has been talking of an ambitious deadline of 2030. In the white paper, it also indicated that a full shift to electric mobility in public transport was possible by 2030; by then, 40 per cent personal vehicles would also be electric.

Former power minister Piyush Goyal had in April said, “The idea is that by 2030, not one petrol or diesel car should be sold in the country.”

“To ensure a smooth phasing in of pure EVs and to sustain the transition to cleaner fossil fuel, the internal combustion engine upgrade must continue over the next decade or so. Progressively, cleaner fossil fuel vehicles would be an essential stepping stone in this journey towards a hundred per cent EV regime,” Siam said.

Pure EV penetration remains quite low: 0.1 per cent in passenger vehicles, 0.2 per cent in two-wheelers and practically nil for commercial vehicles. There are many reasons for this, such as significant affordability gap and low level of consumers’ acceptance, low level of EV manufacturing activities, and nonexistent public charging infrastructure.

The industry wants incentives to make EVs affordable and kick start the process of conversion. Siam has sought a 5 per cent GST for EVs, against the current 12 per cent. A complete waiver of road tax has also been suggested. It has also talked of a priority sector lending rate for EVs.

Siam wants an I-T deduction of 30 per cent of vehicle price from total taxable income in case individual purchasers not taking a bank loan. A maximum vehicle price of ~25 lakh is suggested for this.

For individuals availing finance, an annual I-T deduction of up to ~1 lakh on the interest component for loans, Siam said. An accelerated depreciation benefit of 40 per cent is sought besides a 50 per cent reduction in power tariff for electricity used to charge these vehicles. The industry also wants a full exemption of toll charges on these vehicles.

Automobile firms also want I-T benefits, and a 50% reduction in power tariff for charging e-vehicles