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Union Road Transport Minister Nitin Gadkari has proposed a 10% hike in the Goods and Services Tax (GST) on diesel-powered vehicles. The proposal is part of the government's plans to reduce pollution and promote electric vehicles.
September 12, 2023: During an event hosted by the union of automobile manufacturers, Society of Indian Automobile Manufacturers (SIAM), I said, “I’m going to present a letter this evening to the finance minister proposing to increase the GST on diesel vehicles and all engines that run on diesel.” The government will have no choice but to create conditions to force the industry to act if they do not take sufficient action.
Emphasis on curbing pollution and carbon emissions
According to Gadkari, “Say goodbye to diesel. It’s time to take action, or you won’t be able to sell diesel vehicles.” Gadkari underscored the imperative for the automotive industry to expedite the shift from diesel to cleaner fuel alternatives. He highlighted the environmental concerns linked to diesel engines and emphasized the critical role of curbing pollution and carbon emissions.
The proposed hike
The GST on diesel-powered vehicles is currently 28%. The proposed hike would take the GST rate to 38%. Gadkari said the hike would help to reduce the demand for diesel vehicles and encourage people to switch to electric vehicles.
The minister also said that the government is working on a plan to provide subsidies for electric vehicles. He said that the government is also considering a proposal to ban the sale of new diesel vehicles from 2025.
Impact of the hike
The proposed GST hike will likely impact the prices of diesel-powered vehicles significantly. The prices of these vehicles are likely to increase by around 10%. It’s expected to make them less affordable for many people.
Response from the industry
The industry has responded to the proposal with mixed reactions. Some industry representatives have welcomed the proposal, saying it will help reduce pollution and promote electric vehicles. Others have expressed concerns about the hike’s impact on the prices of vehicles and the demand for diesel vehicles.
The GST Council is expected to consider the proposal in its next meeting. The council is a body that decides on the rates of GST. If the commission approves the bid, it will come into effect from the next financial year.
The proposed GST hike is a significant development in the government’s efforts to reduce pollution and promote electric vehicles. The industry and the public will closely watch the impact of the hike. The diesel car share has diminished in the past nine years from 33% in 2014 to 28%.