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Tax on hybrid vehicles in India proposed to be reduced from 48% to 12%
Nitin Gadkari, Minister for Road, Transport and Highways, has made a noteworthy proposal regarding tax on hybrid vehicles in India. Gadkari advocated a reduction in GST on hybrids from the current 48% to 12%, citing their significant electric operation and minimal pollution footprint.
Currently, electric vehicles in India are subject to a 5% GST, while hybrids face a substantially higher tax rate of 48%. Gadkari expressed concern about this discrepancy, highlighting the environmental benefits of hybrids compared to conventional internal combustion engine vehicles.
Gadkari’s proposal aims to encourage the adoption of hybrid and electric vehicles in the country, aligning with the government’s broader objectives of promoting sustainable mobility and reducing pollution levels. He emphasized the need for discussions on this issue at the next GST Council meeting, highlighting the potential industry benefits, decreased imports and environmental gains associated with a lower tax regime for hybrids.
The automobile sector is of significant importance in India, being a major contributor to GST revenues and boasting a thriving export market. Recent statistics showing that India has overtaken Japan in new car sales underline the sector’s growth trajectory, with Gadkari expressing optimism about India’s potential to become a major global car manufacturing hub in the next five years.
Gadkari recently revealed a Toyota Innova equipped with a flex-fuel engine capable of running on both gasoline and ethanol. This technology, adopted by several prominent car manufacturers, offers an economical and environmentally friendly alternative, reducing dependence on imported fossil fuels.
If the proposed reduction in GST on hybrid vehicles is implemented, there will be a huge demand for strong hybrid cars like Maruti Grand Vitara, Toyota Hyryder, Toyota Innova HyCross, Honda City hybrid and the like. More car manufacturers will consider introducing hybrid vehicles in the Indian market. Maruti is planning to launch strong hybrid versions of the new generation Swift and Dzire that will further accelerate adoption among a wider audience.
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