Government re-evaluating GST rate for hybrid cars

The proposed tax of 43 percent on hybrid cars may be revised after the Indian auto industry voiced its disappointment.

Published On: 29/05/17
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Toyota Prius, one of the world's most popular hybrid cars, falls under the 43% cess bracket as per new GST rules.

The proposed GST on hybrids Cars stands at 43 percent, from an existing levy of 30.3 percent. This, when compared to the 12 percent proposed tax on electric vehicles, has not sat well with the auto industry.

Hybrid vehicles are usually a stepping stone on the route to going full electric. Vinod Dasari, president, Society of Indian Automobile Manufacturers, said, “Differential GST for EVs will also help electric mobility to gain momentum in India. We would have liked to see a similar differential duty on hybrid vehicles to continue.”

Before the GST, hybrid Cars attracted an excise duty of 12.5 percent, similar to entry-level small cars, 1 percent national calamity contingency duty, 2 percent sales tax, and 12.5 percent VAT, bringing the total tax incidence to 30.3 percent.

India has seen more demand for hybrids than for EVs so far. An estimated 22,000 EVs, including 2,000 two-wheelers, were sold last year in India, and demand for hybrids, more specifically mild hybrids, was much higher. Factors that affect demand for EVs is the lack of charging infrastructure, high ownership cost and low range of EVs.