EV batteries will not see any GST cuts as proposal by industry faces rejection

The GST Council's fitment committee rejected the industry's request, so there won't be any decrease in the GST rate on the batteries used in

electric vehicles (EVs)

The EV sector had requested that the GST on batteries be lowered from 18% to 5%, but the fitment committee has suggested keeping the rate as-is.

The fitment committee for the GST Council, which is made up of tax officials from the federal government and the states, is of the opinion that lithium-ion batteries have many applications, including in cellular mobile phones, portable devices, and electric vehicles, according to sources.

It should be noted that while built-up EVs are subject to a 5% GST, lithium-ion batteries and charging stations are subject to an 18% GST. The change occurred only days after Union Minister Nitin Gadkari questioned the vehicle sector at a SIAM event about why buses and trucks couldn't operate on ethanol and praised them for putting more of an emphasis on alternative fuels and electric vehicles.

"I advised businesses to switch to electric vehicles seven years ago; those who still need to do so have experienced a decline in market share today. For the car sector, making the right choice at the right time is crucial, he added.

Kamran Rizvi, secretary of the Ministry of Heavy Industries, also told CNBC-TV18 that it was still too early to speculate on the effects of the reduced subsidy programme for EVs and that the government had not yet made a decision about the deployment of FAME III.

In a recent notification, the Ministry of Heavy Industries announced changes to the FAME II (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) II scheme. The Ministry of Heavy Industries reduced the subsidy on

electric two-wheelers