New Delhi: In a meeting chaired by finance minister Nirmala Sitharaman, the GST Council decided to reduce the tax rate of electric vehicles (EVs) from 12% to 5%. The rate of EV chargers is to reduce from 18% to 5%. These rates will be effective from August 1.

On Saturday (July 27), it has also decided to exempt local authorities hiring electric vehicles from paying GST.

Nirmala, while presenting the Budget on July 5, had proposed tax breaks and incentives in India’s emerging EV industry. The industry had welcomed the proposals as well.

She had told the Parliament that over and above the reduction of rate from 12% to 5%, the government would provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs.

The Society of Manufacturers of Electric Vehicles (SMEV) on Saturday (July 27) welcomed the reduction of GST on electric vehicles to 5%, saying it is in line with the government's steps to promote eco-friendly mobility, even as it sought a similar cut in spare batteries.

SMEV director general Sohinder Gill said with the reduction in GST, the gap between prices of EVs and internal combustion engine vehicles will also be reduced and will thus play a part in faster adoption of electric mobility.

However, Delhi minister Manish Sisodia reportedly said that Punjab, Delhi and West Bengal were not in support of EV rate cut proposals fully.

                                                                                                                                                                                                                                                                                                (With PTI inputs)