Union Minister for Road Transport and Highways, Mr. Nitin Gadkari, had proposed reducing GST percentage on hybrids to make it affordable and accessible for the consumers, however, we now do have a big update for you regarding the progress on this report.
Union Minister for Road Transport and Highways, Nitin Gadkari, has previously advocated for a substantial tax cut on hybrid vehicles, such as the Toyota Innova HyCross, proposing a reduction of the current 48% GST to 12%. This initiative aims to make hybrid cars more affordable and promote environmentally friendly transportation. For example, the top-end V HYBRID trim, currently priced at Rs 20.19 lakh ex-showroom, could see its ex-factory cost drop to Rs 14.13 lakh with a 43% reduction.
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If the proposed 12% GST reduction were applied, the new ex-showroom price would be approximately Rs 15.83 lakh, resulting in a price cut of Rs 4.36 lakh. This decrease would also impact the on-road price, potentially offering savings of around Rs 7 to Rs 10 lakh, depending on the city of purchase. However, the Finance Ministry, led by Nirmala Sitharaman, is not expected to address these tax concessions in the upcoming GST council meeting, opposing the proposed reduction.
Currently, hybrid and internal combustion engine (ICE) vehicles are subject to a 28% GST, with an additional 15% CESS for hybrids with engines above 1200cc for petrol and 1500cc for diesel. Hybrids below these thresholds incur no CESS. Gadkari argues that reducing GST on hybrid vehicles would help decrease pollution and align with the government’s efforts to promote electric and hybrid vehicles for a sustainable future.
Carmakers such as Honda, Toyota, and Maruti Suzuki, which focus on hybrid and petrol vehicles and are planning to introduce electric models, could greatly benefit from such tax reductions. The demand for hybrid vehicles is increasing, and with more models expected from Maruti Suzuki and Toyota, the potential for a future GST reduction remains open.
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