High GST on Batteries a Road Block on EV adoption

In Clean Facts, Clean News, News, Products, Technology

High tax on batteries used in electric vehicles under the goods and services tax regime (GST) may prove a major roadblock to the government’s drive to push e-vehicles, industry insiders say.

Under the new indirect tax regime, while electric vehicles sold with batteries are charged 12% GST, batteries sold without vehicles are taxed 28%. This makes the battery swapping business model — which is at the heart of the government’s plan to promote widespread use of electric vehicles — unviable.

Higher tax on batteries increases operational costs not only for consumers purchasing a second battery for their electric vehicle, but also impacts adversely firms considering getting into battery leasing, battery swapping ventures. It has also impacted the retail sales of electric two-wheelers because dealers generally do not maintain an equal inventory of vehicles and batteries.

On an average, a high-speed lithium ion battery-powered electric two-wheeler with a range of around 80 km is tagged between Rs 80,000-90,000 (inclusive of subsidy). The liion battery constitutes as much as 50% of the cost of such a two-wheeler.

Post GST, tax payable on purchasing a battery is more than Rs 10,000, increasing overall operational cost of e-vehicles.

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