Hybrid Cars Likely to See Scrapping of 15% Cess

2015 Toyota Camry Hybrid Test Ride Review

New tax system slaps 15% cess over and above 28% GST on hybrid cars leaving total tax incidence to 43%

Car buyers who have been planning to buy hybrid model, but are being forced to change decision could see new light soon, as the 15% cess that is being imposed over and above the 28% GST could be scrapped by the GST Council. The government has decided to ask the council to withdraw this cess from the hybrid vehicles. Currently, the hybrid car buyers have to give 43% tax for purchasing these environment friendly vehicles.

The development comes after the strong lobbying from the cart manufacturers that sell the hybrid vehicles in the country. Auto majors like Maruti Suzuki, Toyota, Honda, Mahindra, Volvo currently sell hybrid cars in the country. Due to the high rate of tax, Mahindra decided to stop launching any more hybrid vehicles in future.

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Maruti Suzuki and Toyota have confirmed they would continue selling the hybrid models, but the high rate of tax was surely to affect the sales. The high rate of tax is also affecting the government’s drive to introduce greener mobility solutions across the country in order to curb the alarmingly rising pollution level.

Also, the 43% total tax incidence of these hybrid vehicles put these environment friendly vehicles in the same category with luxury vehicles, which is very surprising indeed. In this scenario, auto majors have been strongly appealing the GST Council to scrap the 15% cess. But, the council has said that the tax slab has been made after studying all the aspects and the decision is firm and final.

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Now, with the government expected to intervene in the matter, the 15% cess on the hybrid cars is likely to be withdrawn. However, it is not sure, if the government will provide subsidy to the hybrid car buyers under the FAME scheme like it has been giving for quite some time. No matter what, if the 15% cess is withdrawn, it would surely improve the retail scenario of the hybrid vehicles across the country and encourage the automakers to roll out these eco-friendly cars here.

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