Lithium-ion batteries get GST rate cut for EVs

• Published On: 30 July 2018
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GST on fuel-cell vehicles, biofuel pellets and ethanol sold to oil companies have also been brought down.

GST (Goods and Service Tax) rates on lithium-ion batteries for electric vehicles have been reduced. The 28th GST Council Meeting held a meeting last week, post which they made this announcement. GST on lithium-ion batteries for EVs now stands at 18 percent from the prevailing 28 percent.

For now, EV prices have not been impacted, at least as yet. Mahindra Electric’s e2o Plus and e-Verito continue at the same rate, and two-wheeler EV start-up, Ather, also confirmed there will be no change in prices for its scooters. The two-wheeler EV brand did confirm, however, the lowered GST rate will “affect future battery replacement costs”.

The rate of GST on fuel-cell vehicles has also gone down from 28 percent to 12 percent. However, fuel cell tech is far away from becoming mainstream, essentially thanks to the challenges of distributing and storing hydrogen. The lower GST, at least initially, won’t spur Toyota and Honda to bring in their Mirai and FCX Clarity fuel-cell vehicles to India any time soon since the infrastructure isn’t ready.

Other rate changes include GST on biofuel pellets (down to 5 percent) and the GST on sale of ethanol to oil companies from 18 percent to 5 percent.