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Owning an electric vehicle to give tax benefits in India

REUTERS
Published : Jul 6, 2019, 10:31 am IST
Updated : Jul 6, 2019, 10:31 am IST

India wants electric vehicles to account for 30 per cent of all passenger vehicle sales in India by 2030.

Sitharaman said the government has already proposed reducing a national goods and services tax (GST) from 12 per cent to 5 per cent to encourage sales.
 Sitharaman said the government has already proposed reducing a national goods and services tax (GST) from 12 per cent to 5 per cent to encourage sales.

India proposed tax waivers on Friday on the purchase of electric vehicles and removed import taxes on some auto components to help boost sales and reduce its dependence on fossil fuels.

India, the world’s third-biggest emitter of greenhouse gases, is home to 14 of the world’s most polluted cities, including the capital New Delhi, with its toxic air claiming more than one million lives in 2017.

Finance Minister Nirmala Sitharaman, presenting the federal budget to parliament, said buyers of electric vehicles will receive an income tax deduction of 150,000 rupees (USD 2,189.30) on interest paid on loans taken out to them.

She added that the government will also withdraw import tariffs on some parts used to make electric vehicles.

“Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles,” she said in the budget speech.

While India wants electric vehicles to account for 30 per cent of all passenger vehicle sales in India by 2030, electric cars account for less than 1 per cent of new vehicle sales due to a lack of charging infrastructure and the high cost of batteries.

Sitharaman said the government has already proposed reducing a national goods and services tax (GST) from 12 per cent to 5 per cent to encourage sales. The plan is to have “mega-manufacturing plants” to make lithium storage batteries and solar electric charging infrastructure.

“The government clearly wants to create an entire ecosystem for e-mobility in the country,” said Puneet Gupta, associate director at IHS Markit.

As part of its programme to cut pollution in its bustling cities, the Finance Minister also announced that it would shut down old and inefficient power plants and look for ways to increase the use of natural gas-based power.

Tags: electric vehicle, budget 2019, india, tax benefits, fossil fuels, nirmala sitharaman
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