GST PANCE recommends a higher tax for luxury EVS. A big blow to Tesla, byd

The Tax Committee recommended a significant increase in consumer fees on luxury electric cars (EVS) at a price above $ 46,000, according to a government document. This proposal is expected to affect the sales of major car companies such as Tesla, Mercedes Benz, BMW and BYD, whose vehicles are often imported instead of manufacturing them locally.

According to a Reuters report, the committee suggested hiking on the goods and services tax (GST) at EVS price ranging from $ 23,000 and $ 46,000 from 5 % to 18 %. The report added that for vehicles, which are more than $ 46,000, the recommendation is to impose a 28 % tax, targeting what the document describes as the “upper part” of society. At the same time, the government plans to cancel the tax rate by 28 %, which may put these vehicles under a 40 % proposed category for luxury goods.

The Commodity and Services Tax Council, which includes members of all states and led by Federal Finance Minister, is scheduled to meet from September 3 to 4 to consider these proposals. The Council maintains the final decision -making authority regarding tax amendments, and its response to the recommendations of the committee is still awaiting.

Possible changes are part of a wider effort by the Administration of Prime Minister Narendra Modi to reform the nation’s tax structure and strengthen local goods. The Moody government has already supported major discounts in commodity tax rates and services on many products, from shampoo to electronics, as part of this reform agenda.

However, the increase in the commodity tax and the proposed services on the advanced EVS aims to highlight the discrimination in the imposition of taxes on high -price vehicles. According to the tax document, “the absorption of electric vehicles increases, and while the 5 % decrease is to stimulate adoption faster for electric cars, it is also important to note that high -price EVS can be imposed on higher rates”, while highlighting the logical basis behind the proposal.

This declaration had already had repercussions in the stock market, as the NIFTY auto index witnessed a 0.5 % decrease in news. Local car manufacturers such as Mahindra, Mahandra and Tata Motors have witnessed their shares of 3 % and 1.2 %, respectively. While these companies have limited offers in the affected price range, the proposed tax increases may affect their future strategies.

The EV market in India, although it is relatively small with EVS, represents about 5 % of the total car sales between April and July this year, grows rapidly. During this period, EV sales increased by 93 %, reaching 15500 units. Tesla, which recently presented the Yi model in India, can be affected by a basic price of $ 65,000, and opened a showroom, due to the current high tariffs on imported cars.

In July, Tata Motors occupied a pioneering position in the Indian electric car market with approximately 40 %, followed by Mahindra by 18 %. BYD made a 3 % market share, while Mercedes -Benz and BMW each make up for 2 %. Tesla, despite the reservations, has not yet started delivery operations in the country.