Batteries for electric vehicles are slapped with 28% tax amount; EVs draw 12% GST
Indian government’s ambitious Mission EV 2030 strategy could face big bump as the batteries for electric vehicles are taxed at 28%. This comes in sharp contrast with the 12% GST on electric vehicles. Due to this, the customers will be affected when purchasing second battery for their electric vehicles. Not only that, the companies considering battery lease or swap program will be affected as well.
The high rate of tax for batteries will affect the pricing of electric two-wheelers as well as the dealers do not keep equal inventory for vehicles and batteries as keeping a large stock of batteries will affect the warranty. So, clearly the customers will have to shell out significantly extra money for the electric vehicles.
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In this scenario, the viability of tax structure is at question, while the government is pushing hard for zero emission mobility by 2030 and taxing the prime components of electric mobility at the same time. So far, despite government’s will to implement all-electric mobility across the country by 2030, the policy seems not right for the growth of the industry.
Battery swapping model for the electric vehicles will make such models affordable for the customers. It is clearly going to play a key role for the success of electric mobility in the country. But, with a high rate of tax, the strategy is expected to face hindrance. Now, it is to be seen if GST council makes any move to reduce the tax rate on the batteries.
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While there is are no questions regarding the good will of the government to introduce zero emission mobility, the policy to implement that is drawing questions from industry persons. Several developed markets have set the deadline to reach the target by 2040, while India is attempting to achieve that by 2030. The desired infrastructure for electric vehicles is not present in the country as well.