GST Rationalisation: Will luxury electric vehicles be charged 18% GST? 

Premium electric vehicles in the Indian market may attract 18% GST as the GST Council rationalises tax rates, Business Today reported. 

Earlier, EVs enjoyed a budget-friendly GST rate of 5%. However, as per the report, the Group of Ministers (GoM) has recommended increasing the rate for premium electric cars. 

According to the proposals, GST on four-wheeled EVs priced between Rs 20 lakh and Rs 40 lakh will be raised from 5 per cent to 18 per cent, while electric buses will continue to be at a concessional rate.

According to the GoM, the current 5% rate disproportionately favours high-end electric car users. The tax rates must differentiate between affordable electric rides and luxury EVs, they added. 

Moreover,  officials pointed out that maintaining a concessional rate for costly automobiles puts the system at risk of revenue loss and leads to inequality.

If approved by the Council, the action might drastically change the cost of luxury EVs in India and affect the demand from wealthy consumers. The GST Council, which will meet in New Delhi on September 3–4, will make the final decision.