Customers of electric vehicles to get an income tax rebate of ₹1.5 lakh
Import of certain parts of electric vehicles to attract lower customs duty
Startups in the electric mobility ecosystem have welcomed the government’s push towards promoting electric mobility by providing income tax benefits to buyers of electric vehicles, incentivising manufacturing of components locally and developing the manufacturing hubs for such vehicles and components.
In her maiden budget speech, finance minister Nirmala Sitharaman proposed to introduce an income tax rebate of ₹1.5 lakh for customers of electric vehicles and voiced the government’s intent to develop India as a manufacturing hub of EVs. She also announced reduction in customs duty on import of certain parts of electric vehicles.
According to Tarun Mehta, founder and chief executive, Ather Energy, an electric scooter manufacturing startup, the government has already moved the GST Council to lower GST on EVs from 12% to 5%, and the additional income tax reduction is a major boost for end consumers to purchase EVs.
“It addresses the concern of the upfront cost of purchasing electric vehicles. This is the best example of a consumer-driven change and is also how Ather envisions the EV sector to achieve scale and growth. It now becomes imperative that OEMs chalk out plans that allow the industry to scale up and meet the demand for compelling products," Mehta added.
“We welcome today's union budget announced by the honourable finance minister and the measures announced to boost the electric mobility sector in the country. The directive to the GST council to lower the GST rate on electric vehicles (EV) from 12% to 5% will be immensely beneficial to the overall industry and will certainly help spur the adoption of EVs," according to Goldie Srivastava, founder and chief executive of Smart- E Technologies, an an electric three wheeler aggregator.
"The additional income tax deduction of ₹1.5 lakh on the interest paid on loans to purchase EVs will boost consumer confidence, leading to higher adoption. We echo the government's vision to make India a hub for EV manufacturing and SmartE will continue to play an integral role in the development of the sector," he added.
The government plans to promote startups in the electric mobility ecosystem in the next few years as it mulls a proposal for banning internal combusting driven two and three-wheelers by 2025 and 2023, respectively.
According to Nishchal Chaudhary, founder and chief executive, BattRE Electric Mobility Pvt Ltd , the budget has clearly indicated the positive intent of the government in pushing the electric mobility revolution in India.
“Consumer adoption of this technology not only requires education and mind shift but also an attractive and feasible overall proposition. I think the government's proposal to lower the GST rate and provide deduction of tax on interest on loans, outlay for infrastructure for battery charging stations are just the kick start measures required," added Chaudhary.
The budget announcements by the finance minister for 2019-20 will catalyse India’s journey to electrification and will be beneficial for both, the e-mobility industry as well as consumers looking to make the shift to electric vehicles. The budget has a strong synergy with the FAME II scheme and the announcement will generate a positive sentiment. Lowering GST rates on electric vehicles to 5% will make EVs more attractive to buyers, according to Praveen Kharb, chief executive 22 Kymko, an electric scooter manufacturing startup.