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GST On Electric Vehicle Batteries May Be Reduced

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New Delhi | 11th June 2022: To give a boost to green mobility plans, the GST council may cut the Goods and Services Tax (GST) on lithium-ion batteries and bring them on par with taxes on electric vehicles (EVs).

Discussions have already started on how to proceed with the plan, which is a crucial step in making India a global manufacturing hub for EVs. The government is expected to develop the final policy in around three months.

At present, e-vehicles are taxed at 5 percent, while lithium-ion batteries are taxed at 18 percent. Battery price makes up as much as 50 percent of an electric vehicle's cost. An emerging trend to tackle the problem of prohibitive cost of EV adoption is battery swapping technology.

The first meeting deliberating on the battery-swapping policy was held on June 7. NITI Aayog, the ministries of new and renewable energy, heavy industries, and other government departments talked about tax rationalisation, standardisation of batteries to ensure interoperability in the meeting.

As GST comes under the Ministry of Finance, NITI Aayog, would not delve much into taxation. Any decision on changing GST would have to be taken by the GST Council.

In 2018, the GST rate on lithium-ion batteries was slashed from 28 percent to 18 percent. In December, NITI Aayog chief executive Amitabh Kant said the government is working on reducing GST on EV batteries.


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TaxGyata Team

TaxGyata Team