Automobile Industry

Relief For Hybrid Cars As 15% Cess Could Be Scrapped

2017 Maruti Ciaz Nexa front

GST rates for hybrid vehicles is likely to be reduced at the next meeting of GST council on August 5, 2017

The Indian automotive industry is dynamic and when we say that, it means prominent changes in reforms that have a direct impact on growth. Just when the industry had regained normalcy in terms of sales after demonetization, the Government implemented Good and Services tax from July 1, 2017. While the new tax reform turned out to be favourable for the car industry with prices going down across segments, it discouraged carmakers working on hybrid technology owing to a substantial increase in tax levied on hybrids. Read More – 2017 Maruti Ciaz Gets Expensive

Hybrid cars to get cheaper

With hybrids being abandoned under the FAME scheme, it has been a double whammy for hybrid vehicles. In attempt to give some respite to cars with hybrid technology, the government is planning to urge GST council to scrap 15 per cent tax levied over the 28 per cent GST. Under the new tax structure, hybrids attract 43 per cent cess which is almost 12.5 per cent more than the previous 30.5 per cent. The carmakers have strongly opposed the new reform which attenuates growth of hybrids in the country. It is now being said that a final decision on the GST rates for hybrid vehicles will be taken at the next meeting of GST council on August 5, 2017. Read More – 2017 Toyota Camry Hybrid Launched At Rs 31.98 Lakh

Hybrid cars to get cheaper

Currently, there are just a handful of hybrid models in India including Maruti’s Ciaz and Ertiga with SHVS technology, which have also been impacted under the new tax reform. Premium hybrid models such as Toyota Camry and Toyota Prius witnessed hike in price by 8 to 10 lakhs, whereas prices of Volvo XC90 and BMW i8 jumped by Rs 16 and Rs 50 lakh respectively.

Last year, Honda had relaunched its Accord brand in India with hybrid technology and a host of other carmakers were also contemplating introducing mild hybrid technology to their popular models. However, with the new tax structure, the carmakers have now put a halt to their investment plans for hybrid technology in India.

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