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In her maiden speech as Finance Minister, Nirmala Sitharaman announced a reduction of GST on electric vehicles from 12% to 5%. She said that the government has moved the GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%. In addition, to make Electric Vehicles affordable for consumers, the government will provide an income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase EVs.
The Finance Minister also said that the government had approved Rs 10,000 crore for the FAME II scheme on April 1, 2019 to encourage faster adoption of electric vehicles by providing right incentives and charging infrastructure. Nirmala Sitharaman also said there will be a comprehensive restructuring of the National Highways Programme to ensure creation of a National Highways Grid to meet a desired capacity.
While presenting the Economic Survey, she said the country must concentrate heavily on electric vehicles because they represent the next generation of sustainable mobility. The Finance Minister said that appropriate policy measures are needed to lower the overall lifetime ownership costs in order to make electric vehicles an attractive alternative to consumers.
She also announced that the government will launch a National Transport Card under it's common mobility plan for universal travel. This card can be used to pay multiple transport charges across the country. The RuPay card will allow users to pay for bus fares, parking charges, toll fees, and rail transport among others.
Kavan Mukhtyar, Partner and Leader, PwC, said, "A welcome move on focus on connectivity as a lever for economic growth. Integrated mobility both personal and goods a high priority. FAME II commitment re-emphasized."
Vinay Piparsania, Consulting Director, Counterpoint Research, said, "This should kick start EV revolution in India - though investing in Electricity Generation Infrastructure is super important to support the EV dream."
The Minister also said that the government is planning to use India's river networks to transport cargo. This she said will reduce traffic on roads and in the railway networks.
Thoughts About The Reduction In GST on Electric Vehicles, And Additional Tax Benefits
Any reduction in taxes are always a blessing. The reduction in GST on electric vehicles will definitely add more value to the vehicles and we could witness a rise in demand of electric vehicles. Electric Vehicles are definitely the way forward, and we are happy to see the government supporting the industry with loads of benefits.