Govt mulls tax incentives for electric vehicle purchase | autos | Hindustan Times
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Govt mulls tax incentives for electric vehicle purchase

autos Updated: Apr 05, 2012 23:43 IST
Sumant Banerji
Sumant Banerji
Hindustan Times
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Looking to invest in mutual funds or fixed deposits to save tax? Why not buy an electric car instead?

The government is looking at a host of options to encourage use of electric vehicles in India, a finance ministry official said.

"The rational is that every consumer who shifts from a petrol or diesel to an electric vehicle helps the state by not using imported fuel. Hence we may reward them by offering a time-bound tax rebate," the official said. "We are also looking at other benefits like lower interest rates (on loans) and toll exemption on national highways."

A broad policy framework for electric vehicles is being prepared by National Council for Electric Mobility, set up last year, and is expected this month. At present, a direct cash subsidy of 20% is provided on purchase of for all electric cars and two-wheelers. Additionally, state governments give their own incentives such as exemption from sales tax and VAT. However, only one company —Mahindra Reva — makes electric cars in the country.

“Obviously the industry is waiting for a specific policy framework,” the official said. “Various countries subsidise electric vehicles, and we are studying them. More cash incentives is difficult but a tax rebate on the lines of Belgium is possible.”

The Belgian government offers tax deduction of upto 30% including VAT on purchase of a new electric vehicle.