Hybrid vehicles are currently charged with 28% GST compared to 12% for EVs; new tax structure affecting hybrid car sales significantly
Toyota is one of the auto majors in the country that have been affected by the high rate of tax for hybrid vehicles under new tax system. As the hybrid vehicles are slapped with 43% total tax incidence including 15% cess over and above the 28% GST, the Japanese automaker has faced serious decline in its hybrid models. The brand has called for equal tax for hybrid and electric vehicles.
While the hybrid vehicles are slapped with 28% GST, the electric vehicles come drawing only 12% tax. This huge difference is clearly understandable considering the Indian government’s strategy to introduce zero emission pure electric mobility across the country by 2030. But, as pricing of electric vehicles are still significantly higher compared to conventional fuel powered models and even hybrid models as well, they don’t have many takers.
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The lack of infrastructure and customer perception is also not in favour of satisfactory sales of electric vehicles. In this scenario, hybrid models come as the closest and most affordable option towards greener mobility. But due to the high tax rate sales of hybrid models have seen a massive decline.
While several auto majors are working on EVs, major brands like Toyota and Suzuki are yet to catch up the pace. Considering the present scenario, Toyota believes the tax structure needs to be modified to encourage hybrid vehicles, because it’s disproportionate to what the actual demands for such electrified models can be. The company also finds the rate of tax for hybrid vehicles unreasonable.
Due to the high rate of GST resulting in sales decline Toyota has been forced to halt production of its Camry hybrid in India. Maruti Suzuki too saw slump in the sales of two its electrified vehicles Ciaz SHVS and Ertiga SHVS due to GST. Another affected brand is Mahindra that sells micro-hybrid powertrain equipped Scorpio. Now, it is to be seen if government pay heed to the auto majors or continue with the current rate of tax for hybrid vehicles.