Auto industry body also moots exemption to such vehicles from road tax
To promote electric vehicles (EVs) in India, auto industry body SIAM has suggested reduction of Goods and Services Tax (GST) on such vehicles to 5% besides giving one-time Income Tax (I-T) deduction of 30% of vehicle price for non-financed buyers. In a white paper submitted to the government, the Society of Indian Automobile Manufacturers (SIAM) also mooted exemption from road tax for EVs while stating that a multi-pronged, segment and customer-specific policy will be needed for a successful transition to electric mobility.
The policy should collectively aim at improving affordability and acceptance of EVs by bridging viability gap; enabling charging infrastructure build-out; encouraging domestic manufacturing and creating public awareness besides providing other enablers, it said.
“Demand incentives or cash subsidies can at best be a short-term measure to kick-start the process. However, tax rebates and other fiscal and non-fiscal measures can be sustained over a longer term and will have a greater impact and outreach,” the paper said.
On specific fiscal measures, SIAM said GST rate for all EVs may be brought down from 12% to 5% and road tax be fully exempted.
For EV buyers, the paper proposed a “one-time Income Tax deduction of 30% of vehicle price from total taxable income to individual purchasers, who have not availed any bank finance for the purchase“.
To determine the cut-off price for such an incentive, a maximum vehicle price of ₹25 lakh (the same used to define SUVs as per SIAM classification) may be considered, it added.
The paper further said for individuals who had availed bank finance to purchase a personal EV, “Income Tax deduction of up to ₹1 lakh on the interest component for loans taken may be given every year during the tenure of the loan, like government’s scheme on home loans“.
Source : http://www.thehindu.com/business/cut-in-gst-will-help-promote-evs/article22277425.ece