The Union Transport Minister, Nitin Gadkari, swiftly addressed the media reports about a potential 10% increase in the Goods and Services Tax (GST) on diesel vehicles. He emphatically stated that the government is not currently contemplating any such proposal.
Mr. Gadkari wrote in X formerly Twitter that “There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free.”
https://x.com/nitin_gadkari/status/1701501884324860043?s=20
The Minister made it explicitly clear that there are no intentions to levy an extra 10% GST on diesel vehicles. While there is a strategy to phase out diesel vehicles due to their association with ‘hazardous fuel’ and to work towards achieving Carbon Net Zero by 2070, there are no intentions to introduce additional taxation. Most of the car brands have stopped manufacturing diesel type vehicles.
In May, a government committee put forward a suggestion to prohibit four-wheeled vehicles powered by diesel engines by the year 2027, advocating a transition to electric and gas-powered alternatives.
It’s important to mention that automobiles currently face a 28% GST along with an additional surcharge ranging from 1% to 22%, which varies according to the vehicle type. However, the lowest is the vehicles of 5% applied to carriages for use by disabled people and related accessories. SUVs, in particular, bear the highest GST rate of 28% with a compensation cess rate of 22%.
The GST Council has stated that a consistent 22% compensation cess will be applied to all SUVs, regardless of how the automotive Original Equipment Manufacturer (OEM) labels them, provided that the vehicle is commonly recognized as an SUV, measures over 4 meters in length, has an engine with a capacity exceeding 1,500cc, and maintains a ground clearance of at least 170mm.
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