Home / Budget 2019 / News /  Tax on fossil fuels, EVs meant to bring about a behavioural shift: Sitharaman

New Delhi: Finance minister Nirmala Sitharaman on Saturday said the tax proposals in the Union Budget for FY20 on fossil fuels and electric cars were meant to nudge people to shun polluting fuels and adopt either electric vehicles or public transport.

In an interaction with reporters, Sitharaman said the increase in the duty on petrol and diesel announced in the budget was not meant to hurt the middle class, but address environmental concerns.

"If I am investing in better metro connectivity, public transport and better future transport, I would expect a behavioural shift towards using public transport rather than using one's own car with a single passenger," the minister said.

In her budget speech, Sitharaman had announced that the softening of crude oil prices had given her enough room to increase the special additional excise duty and road and infrastructure cess by Re 1 a litre each on petrol and diesel.

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Sitharaman told reporters that the budget had several announcements for the benefit of the common man. "If I have given people deduction (of interest paid on loans taken for buying affordable house), it is not for the super rich. It is for the middle-class."

The minister had enhanced the deduction on interest paid on housing loans by 1.5 lakh to 3.5 lakh. The minister had said in her budget speech that this would translate into a benefit of around 7 lakh to middle-class homebuyers over their loan period of 15 years."

Sitharaman told reporters that one has to remember the commitments to protect the environment. "I am helping the middle class shift from a fossil fuel-run vehicle to one that runs on electricity," the minister said.

Rate reductions on Goods and Services Tax (GST) resulted in a benefit of 94,000 crore a year for consumers, which largely benefited the middle class. In the Union Budget, Sitharaman had proposed an additional income tax deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. The central government had also proposed to the GST Council to reduce the tax rate on electric vehicles from 12% to 5%. A panel of officials is looking into the proposals.

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