In a significant development, the Finance Ministry, led by Nirmala Sitharaman, is not expected to discuss granting tax concessions for hybrid cars in the upcoming GST council meeting. This decision comes despite Union Minister for Road Transport and Highways, Nitin Gadkari’s earlier proposal to reduce the GST on hybrid vehicles from the current 48% to 12%. Currently, hybrid and internal combustion engine (ICE) vehicles face a 28% GST, with an additional CESS of 15% for hybrids above the 1200cc petrol and 1500cc diesel engine thresholds, while hybrids below these limits are exempt from the CESS.
Gadkari has been a strong advocate for lowering the GST on hybrid vehicles, arguing that such a move would promote eco-friendly transportation and help reduce pollution levels in India. He believes that reducing the tax burden on hybrid vehicles aligns with the government’s broader goals of encouraging electric and hybrid technologies to combat climate change and air pollution. Gadkari emphasized the importance of incentivizing cleaner technologies in the automotive sector to achieve a greener and more sustainable future.
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Carmakers like Honda, Toyota, and Maruti Suzuki, who are focusing on hybrid vehicles along with petrol options and are preparing to launch electric vehicles, could have benefitted significantly from the proposed tax cuts. The sales of hybrid vehicles are on the rise, with more models expected from Maruti Suzuki and Toyota in the coming months. While the Finance Ministry’s current stance is a setback, there remains a possibility of future GST reductions as the government continues to explore ways to promote sustainable automotive technologies.