GST Council to reduce GST Rates on Lithium-Ion batteries and EVSE

Seep Gupta
Seep Gupta at April 24, 2022

The current tax rates for lithium-ion batteries and electric vehicle supply equipment (EVSE) are 18% and 5% respectively. GST Council may consider reducing these rates on the basis of the draft policy prepared by the Niti Aayog. The draft paper mentions the functional and technical requirements as to how one can proceed to practice a more effective, efficient, reliable, safe and customer-friendly implementation of battery swapping infrastructure.

Highlights of the Policies mentioned in the Draft formulated by the Niti Aayog

The draft also mentions that any individual is free to set up a battery swapping station at any location of his or her choice. But before doing that, all the compliances, specified technical safety guidelines and performance standards need to be adhered to. The following things are proposed in the draft bill. These are given below:-

  • The overall aim of the draft bill is to catalyse the large scale adoption of EVs by improving the efficient use of the resources such as public funds and other raw materials for effective and safe delivery of customer-centric services.
  • This policy was first announced by the finance minister of India ie Nirmala Sitharaman in the union budget of this year.
  • The paper also talks about the various policies and strategies for boosting battery swapping in metropolitan cities where the population is above 40 lakhs.
  • In the second phase of the implementation of the policies which are mentioned in the draft, all the major cities with a population above 5 lakhs, state capitals and union territories will be covered.
  • The draft policies also seek to provide equal opportunities to the business models that are involved in selling EVs. The size will be determined by the kWh rating.
  • The draft also seeks to promote the adoption of BaaS models. It stands for Battery as a service model.
  • Heavy penalties and fines will likely be imposed on the companies and the organisation that will not adhere to the guidelines, policies and protocols mentioned in the draft.

Conclusion

In the past month, almost half a dozen of fire incidents occurred because of the defects in the EVs across the country. Some people have lost their lives too in these unfortunate incidents. The union minister has also announced a probe into these incidents of fire accidents in the EVs.

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