Government Offers Tax Benefits On E-vehicle Sales

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The government recently announced income tax rebates in the 2019-20 Union Budget to encourage the electric mode of transport. This is in line with its aggressive push to promote electric vehicles to reduce fuel import bills. As per government’s estimates, the country’s import dependency on oil has increased from 78.3 per cent of total consumption in 2014-15 to settling at a new high of 83.7 per cent in the 10-month period of Fy19. The consumers will also have to pay more for diesel and petrol. The special additional excise duty and road and infrastructure cess will be increased by one rupee a litre each. In her Budget speech, finance minister Nirmala Sitharaman said the government has moved the Goods and Services (GST) Tax council to lower the rate on electric vehicles from 12% to 5%. The Centre will also provide an additional income tax deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. It will amount to a maximum benefits of around 2.5 lakh over the loan period. Niti Aayog, has proposed a complete ban on all internal combustion engine powered two-wheelers and three-wheelers in India starting 2025. Opposing the move, Rajan Wadhera, President of the Society of Indian Automobile Manufacturers, said “Increasing the duties on auto parts and putting an additional cess on petrol and diesel could drive up costs of vehicles, especially where volumes are low and localisation is not viable”.

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