Finance Minister Nirmala Sitharaman announced the budget for FY 2019-20 on 05 July’19 in the parliament. The budget brought many incentives and tax benefits for different sectors in the country. The key sector to benefit the most and to receive the maximum level of attention was Electric Vehicle.
After the launch of phase II of FAME (Faster Adoption and Manufacturing of Electric Vehicle), the Government made it pretty clear that they want to boost the adoption of EV. Budget declared yesterday also declared incentives on the same.
While presenting the Union Budget 2019, Finance Minister Nirmala Sitharaman announced that there will be an additional tax benefit of Rs 1.5 lakh on the interest paid on the loans taken for the purchase of the electric vehicles (EVs).
Additionally, the government has also moved the GST Council to decrease the GST rate on EVs from 12 per cent to 5 per cent.
“Government has already moved GST council to lower the GST rate on electric vehicles from 12 per cent to 5 per cent. Also, to make electronic vehicles affordable for consumers our government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs.”Nirmala Sitharaman said.
Earlier the government also allocated Rs 10,000 crore for faster adoption of electric vehicle. It said that this move will help attract investment for manufacturing of E-vehicles in India and ensure clean energy being used over time.
“The announcements on Electric Vehicles (EVs) in the union budget 2019-2020 bring cheers to both consumers as well as e-vehicle manufacturers. To make India as an EV manufacturing hub, decision on incentivizing EV manufacturing by extending benefits under Section 35AD(1) is a move in the right direction. It will help in the creation of a local manufacturing base and encourage component manufacturers to invest in the sector. Provision of additional income tax deduction of an amount upto 1.5 Lakh rupees on purchase of EVs would encourage customers to opt for EVs. Additionally, bringing down custom duty on lithium-ion cells to nil would further cut down the cost of batteries and help local battery manufacturers to scale-up the business. The EV industry has witnessed 100 per cent growth in FY 18-19, and with these key measures announced today, we anticipate a brighter future ahead for the industry.”Sohinder Gill, Director General, SMEV said.
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