Govt. reduces GST on spare lithium-ion batteries to 18%

The GST Council has decided to reduce the GST rate on lithium-ion batteries from 28% to 18%. The new rates will come into effect from July 27, 2018.

The revised rate of 18% is only applicable to lithium-ion batteries that are sold separately. The lithium-ion batteries fitted in electric vehicles (EV) attract 12% GST.

According to the Society of Manufacturers of Electric Vehicles (SMEV), the higher tax rate adversely impacts the cost of ownership of electric vehicles that are based on a battery swapping model. They claim that reducing the GST rate to 12% would promote EVs.

Currently, most manufacturers depend on imported lithium-ion battery packs which attract an additional 20% import duty. Lower taxes would also promote local manufacturing of lithium-ion batteries, which could bring down the overall cost of EVs. 

Source: Times of India