GST Council Could Reconsider Steep 43% Tax on Hybrid Cars

Toyota Camry Hybrid front

Hybrid vehicles draw 15% cess over the 28% GST leaving the total tax amount 43%; could hurt government’s eco-friendly transportation dream

In the face of concern and displeasure from auto manufacturers, GST Council is likely to reconsider the 43% tax on hybrid cars. According the proposed tax structure, the hybrid vehicles are positioned in the 28% slab in GST. Also, above that the hybrid cars will draw 15% cess leaving the total tax amount at 43%. With this, the automakers showed their displeasure and it is also expected to hurt government of India’s eco-friendly mobility dream.

In this scenario, GST Council is expected to sit again next week and reconsider the tax amount for the hybrid vehicles. Currently hybrid cars need to pay a total tax amount of 30.3%. If the proposed tax rate is implemented, these cars will become much higher priced, driving the customers away.

2015 Toyota Camry Hybrid Test Ride Review

Also read: Automakers Aren’t Happy With 43% GST Rate for Hybrid Vehicles

Auto industry majors are expected to write about the issue to the Finance Ministry this week, so that the tax structure gets reconsideration. Hybrid cars are not so popular yet in the country, but the demands have increased from before. Currently, the Camry and Prius car the hybrid cars that have earned positive response compared to other hybrid cars. But these vehicles are already positioned in Rs. 30 lakh – Rs. 4 lakh slab and with GST Council’s proposed tax rate they are expected to be priced beyond that slab.

The GST or Goods and Service Tax reforms the tax structure across the country and it is to be implemented from 1st July, 2017. Under this, mid-size and large sized hybrid cars will draw 15% cess that is similar as the passenger cars. Interestingly, according to the proposed tax slabs, smaller cars will become much pricier compared to the larger cars and SUVs. Indian market still being largely dependent on the mass market smaller products, this new pricing could hurt the industry.

New Generation Honda Accord Hybrid 5

Also read: Upcoming Toyota Cars in India in 2017, 2018

Indian government is ambitious to introduce electric mobility across the country by 2035. But, infrastructure remains a hindrance before that. Also under the GST, electric vehicles draw a cess of 12%, which doesn’t help the buyers with lowered pricing. This way again, government of India’s electric mobility dream could get hurt.

Toyota Camry Hybrid Gallery