The Union budget presented on Friday (July 5) proposes a massive push for electric vehicles (EVs) by allowing income tax exemptions to the tune of ₹1.5 lakh on interest of loans taken to buy these automobiles.
Finance Minister Nirmala Sitharaman, who presented the budget, said it would benefit EV buyers to the extent of ₹2.5 lakh over the loan period.
The tax exemption makes it clear that the government has finally woken up to implementing EVs which have caught up in many parts of the world. Among the several benefits of using EVs are that they are eco-friendlly and will reduce dependance on oil, the imports of which have become tenuous following international political instability.
The government appears firm in its resolve to promote EVs by asking the GST council to reduce the tax slab to five percent from the existing 12 percent. Further, it has made sure buyers are dissuaded from picking up conventional petrol-oil vehicles by keeping it in the 28 percent GST slab and imposing cess ranging from 1-15 per cent.
The budget sop to EVs comes close on the heels of the Economic Survey on Thursday which talked about increasing the charging infrastructure that is key to adoption of EVs. There could also be a slew of related benefits including removal of toll and parking fees for EV to increase their usage.
The government is also contemplating making India a hub of EV manufacture and to facilitate this by creating an environment that will ensure that the latent demand picks up.
The eagerness to give a fillip to EVs can be understood in the context of a mere 0.06 percent of these vehicles on Indian roads compared to two percent in China and 39 percent in Norway.