Union Minister for Road Transport and Highways, Nitin Gadkari, had proposed slashing GST on hybrids to make it affordable and accessible for the consumers, however, we now have a big update regarding the progress on this report.
GST Reduction on Hybrids: New Details!
Union Minister for Road Transport and Highways, Nitin Gadkari, previously proposed a significant tax cut on hybrid vehicles, such as the Toyota Innova HyCross, suggesting a reduction of the current 48% GST to 12%. This move aimed to make hybrid cars more affordable and promote eco-friendly transportation. For instance, the top-end V HYBRID trim, currently priced at Rs 20.19 Lakh ex-showroom with 43% reduction, ex-factory cost is Rs. 14.13 Lakhs.
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But if we take the proposed 12% GST reduction, the new ex-showroom price would be Rs. 15.83 Lakh resulting in Rs. 4.36 Lakh price reduction. Moreover, this price drop would reflect in the on-road price as well, potentially resulting in 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 discuss these tax concessions in the upcoming GST council meeting, opposing the reduction.
Currently, hybrid and ICE vehicles face a 28% GST, with an additional 15% CESS for hybrids with engines above 1200cc for petrol and 1500cc for diesel, while hybrids below these thresholds incur no CESS. Gadkari argues that lowering GST on hybrid vehicles would help reduce pollution and align with the government’s efforts to promote electric and hybrid vehicles for a sustainable future.
Carmakers like Honda, Toyota, and Maruti Suzuki, which focus on hybrid and petrol vehicles, and are soon to introduce electric models, could benefit from such tax reductions. The sales of hybrid vehicles are rising, and more models from Maruti Suzuki and Toyota are expected soon, keeping the possibility of a future GST reduction open.
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