The Goods and Services Tax (GST) Council on Saturday decided to reduce the tax rate on electric vehicles to 5% from 12% and levy on EV chargers or charging stations to 5% from 18%, effective from August 1, 2019, as said by an official statement.
The council also has extended a GST exemption on hiring of electric buses by local authorities with a carrying capacity of more than 12 passengers.
The meeting was chaired by Finance Minister Nirmala Sitharaman and it was held via video conferencing.
The central government is also taking initiative to popularize environment-friendly electric vehicles.
The government has also provided additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase EVs in the Union Budget 2019-20. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle. The benefit is available for loans taken on or before March 31, 2023, as quoted by Nirmala Sitharaman in her Budget speech.