No Tax Concession For Hybrid Vehicles In India: Reports

In what would have been a solid move, it has now been reported that the Finance Ministry, which Nirmala Sitharaman heads, will not be reducing GST or providing any concessions to hybrid vehicles with the 2025-25 budget that it will present post-elections. This will be a significant setback for Original Equipment Manufacturers (OEMs) like Maruti Suzuki, and Toyota, who have bet heavily on hybrid vehicles. 

However, on the other hand, it means a significant boost for manufacturers like Mahindra & Mahindra and Tata Motors, who have several EVs in its portfolio. Otherwise, the tax concession on hybrid vehicles would have driven a lot of potential EV buyers towards hybrids

This news come after the Minister of Road, Transport, and Authority, Nitin Gadkari, had voiced the need to reduce the GST on hybrid vehicles to 12 per cent. The minister had also sent a proposal to the finance ministry for consideration. Gadkari’s reason for such a deduction was to boost the sales of green vehicles, and hybrids were the most sensible upgrade from an ICE-powered car to anything green. 

Currently, hybrid vehicles are taxed as much as 48 per cent, while EVs attract just five per cent GST. As a result, EV sales registered a solid 22 per cent year-over-year growth in April 2024 with 6,577 units retailed. Out of which, Tata Motors held the maximum market share with 4,071 units, followed by MG Motors with 813 units and Mahindra & Mahindra with 580 units sold. 

On the other hand, hybrid vehicle sales were mainly driven by Toyota, which also has the most number of hybrid vehicles in its line-up. In the first quarter of 2024, Toyota has already retailed 24,722 units of strong hybrid vehicles followed by Maruti Suzuki with 3,441 units, and lastly, Honda which retailed 275 units. 

It remains to be seen how OEM react to this decision of not lowering GST taxes on hybrid. We have already reached out to Maruti Suzuki and Toyota for their response on the same. Keep an eye on this space for more information.