Gadkari says will request Jaitley to reduce GST rate on hybrid vehicles

At present hybrid vehicles attracts excise duty of 12.5% with an effective overall tax rate of 30.3%.

Union minister Nitin Gadkari on Thursday said that he will urge finance minister Arun Jaitley to bring down GST rate on hybrid vehicles and other automobiles that run on alternate fuels.

An electric car charging sign is seen at commercial EV charging station. (Reuters file photo)

Under the GST rates announced last week, hybrid cars, which are considered eco-friendly, are slated to attract a 15% cess over and above peak rate of 28%, same as those of large luxury cars and SUVs.

The automobile industry has expressed concern on the high rate on hybrids stating it would put a spanner in the wheels of government plans to promote green vehicles.

At present hybrid vehicles attracts excise duty of 12.5% with an effective overall tax rate of 30.3%.

“I will be meeting Arun Jaitley soon to request that tax slabs for vehicles run on ethanol, bio diesel, bio CNG should be reduced. I will also request him to reduce tax rate on hybrid vehicles in order to tackle air pollution in the long run,” road transport and highways minister Nitin Gadkari told PTI in an interaction.

The minister, who also holds shipping portfolio, said the government’s policy is to promote electric mobility in the country. GST rate on electric vehicles has been kept at 12%.

“It is our policy to encourage electric cars and buses. Shortly, I will be coming out a policy regarding this. Hybrid cars should also be encouraged, it saves fuel,” he said.

Electric and hybrid vehicles along with alternate fuels like ethanol should be encouraged in order to reduce India’s import of crude oil.

“We import crude worth Rs 7 lakh crore. Electric, ethanol, bio diesel, bio CNG these are import substitutes and are cost effective, pollution free and indigenous too,” Gadkari said.

If such vehicles are encouraged on a large scale, the cost will also come down, he added.

Auto industry is also planning to take up the matter of higher tax rate on hybrid vehicles with the finance ministry this week.

Some of the popular hybrid vehicles sold in India are Camry Hybrid and Prius from Toyota and Honda Accord. These cars are priced between Rs 31.98 lakh and Rs 38.96 lakh.

A host of other companies were also planning to foray into the segment.