The Society of Manufacturers of Electric Vehicles (SMEV) wrote a letter to Minister Arun Jaitley, requesting that the government should exempt electric vehicles from the ambit of Goods and Services Tax (GST).
SMEV requested this because the sector significantly contributes in reducing vehicular pollution. In a letter to the Finance Minister, SMEV requested that the government should "consider a special treatment for electric vehicles via an exemption from GST when the GST slabs are determined for the automobile sector."
SMEV is the association which represents Indian manufacturers of electric vehicles and electric vehicle components. In that request letter, it is said that electric vehicles are adopted by the world markets as they have been recognised as a significant contributor to the reduction of vehicular pollution.
It added, "Widespread usage of this vehicle is expected to gain significantly in ensuring fuel security, attain saving to the tune of Rs 42,000 crores in crude oil subsidy."
According to reports, about 80,000 customers have adopted electric vehicles such as two-wheelers, e-rickshaws and small electric cars last year.
It also said that the industry is just beginning to find its feet in the Indian automobile industry. "It is imperative that the favourable tax structure should continue under the GST regime," it added.
"GST on electric vehicles should ideally be fully exempted or at best be kept at 5 percent. Anything more than that will certainly increase the prices of EVs and the EV industry that has just started seeing some green shoots will again de-grow and may collapse altogether," it said.
"Given that the number of electric vehicles sold in the country is a very small fraction of all automobiles sold, the impact of such an exemption would not be burdensome for the exchequer," it added.