High-End EV Cars: GoM Pitches 18% GST; Centre Favours Retaining Concessional Rate

The Group of Ministers (GoM), tasked with recommending reforms to streamline the Goods and Services Tax (GST) structure, has submitted a draft proposal to the GST Council suggesting differential tax treatment for high-value electric vehicles (EVs).

According to the GoM, electric four-wheelers priced above Rs 20 lakh may attract an increased GST rate of 18%, compared to the current 5%.

The panel believes that the GST regime should distinguish between affordable, mass-market EVs and premium models to ensure that government incentives are better targeted.

The GoM has proposed that electric buses should continue to benefit from the concessional tax slab, given their significance in public transportation.

The Centre has, however, proposed no change to the current 5% concessional GST rate for all categories of EVs, including electric cars and buses.

“The continuation of the lower rate aligns with the government’s broader objective of accelerating electric mobility adoption in the country,” a senior government official said.

The GoM, comprising representatives from both Centre-ruled and opposition-ruled states, has argued that a uniform 5% GST rate disproportionately benefits high-end EV buyers, potentially leading to inequity in the tax structure and revenue loss.

The GST Council is scheduled to deliberate on the GoM’s proposal at its upcoming meeting on Sept. 3 and 4, as part of a broader rate rationalisation exercise.

A final decision will depend on consensus between the Centre and the states.