Automakers Urge To Reduce GST Rate On Hybrid Vehicles

To be precise, the hybrid vehicles will attract 28 percent tax and 15 percent cess from July 1, 2017. The total tax will go up to 43 percent from the current tax rate of 30.3 percent. This is a huge setback for the hybrid vehicle segment.

The automobile industry is set to meet the GST Council on June 11, 2017. And the automakers have decided to ask the government to exempt hybrid vehicles from the additional cess.

A senior industry official said, "We are at loss as to why hybrid electric vehicles have been clubbed with petrol and diesel luxury cars in the highest tax bracket. It is incomprehensible and merits an urgent review."

The automobile manufacturers have also asked the government to reduce the tax rate to 18 percent. The automakers stated that the hybrid vehicles are efficient and eco-friendly and require the scale and volume to make them affordable.

Previously, in a submission to the government, Society of Indian Automobile Manufacturers (SIAM) proposed a 10 percent difference in tax rate compared to the conventional cars. But the new GST system is entirely divergent.

Currently, the hybrid vehicles are levied an excise duty of 12.5 percent similar to the entry-level small cars. Apart from that several other taxes are also levied which brings the total number to 30.3 percent.

On the other hand, the government is stating that the country will shift to all-electric vehicles by 2030. But by looking at the tax rates levied on the eco-friendly vehicles, the target seems still far away.