Hybrid cars will draw 28% GST plus 15% cess resulting in total incidence of 43%; automakers think it’s too high
Despite concerns from several automakers GST council could continue with the 28% GST and 15% cess for the hybrid cars. This results in a total tax incidence of 43% that the automakers believe is much higher and could affect the government of India’s drive towards an environment friendly electrified fleet of cars.
Finance minister of India Arun Jaitley has hinted that the tax rate for hybrid cars will be unchanged. He said that the demand from auto industry is not in sync with the study conducted by the tax officials. However, he also said that officials can sit with the automakers to discuss the issue and government also has the required data to defend the proposed tax rate.
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The upcoming Goods and Services Tax will implement an all-new tax structure across India that will abolish the older tax structure. Under the new tax system goods and services are segmented in four tax slabs 5%, 12%, 18% and 28%. Under the GST that is scheduled to be rolled out on 1st July, the small cars will be pricier while the big SUVs and luxury cars will be cheaper.
Speaking about the hybrid and electric cars, they draw 28% GST and 15% cess on and above that. With this, the total tax amount goes to 43%, which will see a high pricing for these cars. Demands for hybrid and electric cars are still in the primary stage in India compared to conventional fuel powered cars. With the implementation of proposed GST rate, people are likely to shy away from buying the hybrid and electric vehicles.
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Currently, hybrid cars draw a 12.5% excise duty similar to the conventional powered small cars. The total tax amount these hybrid vehicles have to pay is 30.3%. So, it is clear that with implementation of GST will pricing of these cars will see a big leap.
Toyota Camry Hybrid Gallery