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GST Council May Skip Tax Relief for Hybrid Cars, Boosting Electric Vehicle Sector

In an unexpected turn, the upcoming GST Council meeting might not address tax concessions for hybrid cars, reports ET Now. This news delivers a blow to companies like Maruti Suzuki but brings a significant advantage to electric car manufacturers such as Mahindra and Tata Motors.

Earlier, Transport Minister Nitin Gadkari had urged the Finance Ministry to slash the GST on hybrid cars to 12%. He emphasised the need to rationalise taxes to promote climate-friendly vehicles and combat air pollution.

Currently, electric vehicles (EVs) enjoy a 5% tax rate, while hybrids face a hefty 43% tax, just shy of the 48% tax on petrol cars.

Auto giants like Honda, Hyundai, Toyota, and Maruti Suzuki heavily invest in hybrid technology. However, electric vehicle sales surged by 22% in April, with Tata Motors leading the pack.

While Maruti Suzuki eyes affordable hybrid cars, Chairman RC Bhargava urges the government to reduce GST on hybrids for wider adoption. However, the final decision rests with the GST Council, which will determine the trajectory of hybrid and EV expansion in the country.

Monika Shanmugam