- By Divanshi Sharma
- Thu, 16 May 2024 05:34 PM (IST)
- Source:JND
The Indian Finance Ministry has decided not to discuss the idea of providing tax benefits for hybrid cars in the upcoming GST council meeting. According to a report by ET Auto, this decision comes despite a request from Nitin Gadkari, the Minister of Road Transport and Highways, who proposed a reduction in GST on hybrid vehicles.
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Gadkari's proposal aimed to reduce the GST on hybrid cars to 12 per cent. Currently, both hybrid and internal combustion engine vehicles are taxed at 28 per cent GST, with additional taxes, leading to tax rates of over 40 per cent for vehicles.
Gadkari's proposal aligns with the government's broader goal of promoting cleaner technologies in the automotive sector to address climate change and air pollution. However, the Finance Ministry seems to be cautious about granting tax benefits to hybrid vehicles at this point. The government seems more interested in promoting electric vehicles. Despite the growing demand for hybrid cars, Gadkari's proposal to reduce taxes on them doesn't seem to have the support of the finance minister, indicating a difference of opinions within the government.
This move by the Finance Ministry may be seen as good news for Indian car manufacturers like Mahindra and Tata Motors as they mainly focus on EVs, rather than hybrid vehicles. The ministry's hesitation to consider tax benefits for hybrid cars suggests a focus on other priorities over encouraging the adoption of hybrid vehicles.
This decision from the Finance Ministry could impact various stakeholders, including major Indian automakers and global players like Toyota, Maruti Suzuki and Honda, who have been investing in hybrid vehicle technology. These companies mainly focus on hybrid vehicles that combine petrol and electric motors and sales of such vehicles have been increasing.
