The transport ministry has written to the finance ministry asking for the goods and services tax on hybrid vehicles to be reduced from 28%. This comes after the GST Council, the apex decision-making body for the tax, slashed the rate for electric vehicles to 5% last month in a bid to boost cleaner sources of mobility. While the government is still deciding on a roadmap for the transition to alternative fuels and electric vehicles, a reduction in GST for hybrid vehicles will provide some relief to automakers. A government official aware of the matter said the transport ministry had written to the finance ministry last month to lower the GST for hybrid vehicles. “The idea is to promote alternative sources of fuel,” the official told ET, asking not to be identified.
The official said whether it comes down to 18% or is at par with electric vehicles, the idea is to incentivize the purchase of such automobiles. After GST was cut for electric vehicles, auto manufacturers have been lobbying for lower rates in all categories. “In our shift to cleaner sources of mobility, we want to be technology agnostic and not promote just electric vehicles,” the official said. The idea is to have vehicles that are cost-effective, sustainable and indigenous, the official added. Sales of hybrid vehicles in India have not picked up because of their high cost, with most models offered in the premium segment.