The Goods and Services Tax Council on Saturday decided to bring down the tax rates on electric vehicles to 5% from the current 12%. The changes will come into effect from August 1.

The council, in its 36th meeting, also slashed Goods and Services Tax on chargers or charging stations for electric vehicles from 18% to 5%. The meeting, which was chaired by Finance Minister Nirmala Sitharaman, was held via video conferencing.

The council exempted local authorities from the indirect tax for hiring electric buses with capacity of more than 12 passengers.

The decisions came at a time when the central government has been trying to make electric vehicles affordable. In the Union Budget presented on July 5, the finance minister had announced an additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to buy electric vehicles. She had said that customs duty on certain parts of electric vehicles would be removed.

‘Game plan’ for electric vehicles

Meanwhile, NITI Aayog Chief Executive Officer Amitabh Kant on Saturday said that India has a “game plan” for electric vehicles that will ensure clean cities, reduce imports and utilise solar power. “We have a game plan to drive electric vehicles, particularly two and three-wheelers, public transport and manufacturing of batteries in India,” Kant said. “Our objective is that we should first work on about 80% of components of two and three-wheelers and buses and also push manufacturing of batteries in India.”

Only 20 out of every 1,000 Indians presently own a car. Kant said the low percentage can pursue a different model of manufacturing automobiles than in the West. “Our emphasis must be shared, connected electric transportation,” he said.