GST Shake-Up May Drive Up Prices of Luxury EVs: Big Changes Ahead for India’s EV Market

GST Shake-Up May Drive Up Prices of Luxury EVs: Big Changes Ahead for India’s EV Market

The GST Council is currently putting great efforts towards simplifying tax rates, which will be a major milestone for India’s electric vehicle (EV) market, according to a new channel.

The electric vehicles (EVs) in India are presently enjoying a lower GST rate of 5%; however, the Group of Ministers (GoM) has proposed a big tax increase for high-end or luxury four-wheelers.

According to the said proposals, GST will be increased from 5 per cent to 18 per cent on four-wheeled EVs ranging between Rs 20 lakh and Rs 40 lakh. However, electric buses will continue to be at the lower tax rate.

The Group of Ministers (GoM) says that the current flat 5% GST rate mostly helps buyers of expensive electronic vehicles. They believe there should be different tax rates for affordable EVs meant for the general public and luxury EVs sold as premium products.

Officials said that giving low tax rates to expensive vehicles could lead to a loss of government revenue and make the tax system unfair. If the GST council accepts the proposed GST reforms, the changes will significantly revise the pricing of expensive electronic vehicles in India and may affect demand from wealthy customers. The final decision will depend on the GST council meeting scheduled to be held on September 3rd-4th in New Delhi.