At present, e-vehicles are taxed at 5% while lithium-ion batteries are taxed at 18%.
The decision was taken at the GST Council’s 47th meeting in Chandigarh on June 28-29, chaired by Union Finance Minister Nirmala Sitharaman.
“Electric vehicles, whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5%,” a ministry statement read.
Akshit Bansal, CEO of electric vehicle (EV) charging network provider Statiq, said that the government has declared a clear intention to boost domestic EV adoption and usage by making the industry eligible for a concessional GST rate of 5%.
“This move will encourage the industry to pass on more cost benefits to the users and also lend a necessary push to people who are still looking for incentives to adapt to the EV way-of-life,” Bansal told IANS.
“I welcome this move of industry-wide GST reduction to 5% and thank the government for helping us bridge the gap between the possible adoption of EVs and a real-life rise in its adoption,” he added.
Battery price makes up as much as 50% of an electric vehicle’s cost.
In 2018, the GST rate on lithium-ion batteries was slashed from 28% to 18%.
In December last year, then NITI Aayog CEO Amitabh Kant said the government was working on reducing GST on EV batteries.