Ahead of the GST Council's meeting on Sunday, the auto industry has sought an “urgent review” of the GST rate on hybrid electric vehicles, seeking a duty differential of 10% from the conventional ones.
The industry body, in a letter to the Finance Ministry, has also requested that 15% cess recommended by the GST Council on luxury vehicles should not be levied on hybrid electric vehicles above four metres.
“SIAM has requested that [for] all vehicles falling under the 28% GST bracket, their hybrid version should be levied a 10% lower GST rate of 18%, without any cess,” an industry official said. SIAM said it had suggested a duty differential “to encourage new technology.”
Without such differential, “it will be impossible to make a small hybrid electric car, commercial vehicle or two/three wheeler viable.”
For bigger hybrid electric vehicles, the industry body said the reason for clubbing them with petrol/diesel driven luxury vehicle under the same tax bracket is “incomprehensible”.
“The GST rate plus cess amounting to 43% on hybrid electric vehicles is totally divergent from the stated government approach of minimal change in tax incidence for any item when migrating to GST,” it said.
The current tax incidence on such vehicles in a little above 30%.
The industry body argued that hybrid vehicles are much more efficient and eco-friendly but require scale and volume to become economically viable.
