JSW MG Motor India says passenger vehicles' GST rate outdated; seeks revision

JSW MG Motor India sees the current GST rate structure for passenger vehicles in the country as outdated. The automaker has advocated for a revision in the GST rate structure for passenger vehicles in order to be aligned with the new developments in the auto industry. In an interaction with PTI, JSW MG Motor India's CEO Emeritus Rajeev Chaba has advocated for a revision in the tax structure ahead of the upcoming Union Budget 2024, which is slated to be tabled in Parliament on July 23.

Chaba reportedly said that the Indian government should consider the overall perspective of vehicular emissions, reduction of import bill, sustainable local supply chain and total cost of ownership while formulating the policies for the auto sector. "Earlier, we said the size of the car was sub-four meters. We said 1.2-liter engine, 1.5-liter engine based on that we had a lot of GST structure. I think gone are those days," he reportedly said.

Current passenger vehicle tax structure in India

Currently, electric vehicles in India attract five per cent GST, while hydrogen fuel cell vehicles attract 12 per cent GST. The passenger vehicles are powered by petrol, CNG, and LPG with sizes ranging up to four metres in length and having engines of up to 1,200 cc attract 28 per cent GST along with a one per cent compensation cess.

On the other hand, diesel-powered passenger vehicles with sizes of up to four metres in length and engines up to 1,500 cc are taxed with a GST rate of 28 per cent with a three per cent cess, while PVs powered by engines of up to 1500 cc are taxed at 28 per cent with cess of 17 per cent. Passenger vehicles with engines of above 1,500 cc attract 28 per cent GST with 20 cent cess, and SUVs above four metres in length with over 1,500 cc engine and more than 170 mm ground clearance attract 28 per cent GST and 22 per cent cess.

Hybrid passenger vehicles with lengths of up to four metres and up to 1200 cc petrol engine or up to four metres of length and up to 1,500 cc diesel engine attract a GST rate of 28 per cent without any cess. On the other hand, hybrid PVs above four metres or above 1,200 cc petrol engine or above 1,500 cc diesel engine attract a GST rate of 28 per cent with 15 per cent cess.

Watch: Exclusive first look at the India-bound JSW MG Motor Cloud EV

JSW MG Motor India tax sops for strong hybrids

As the Union Budget is nearing, there have been speculations that hybrid vehicles in the country could be considered for tax incentives. The recent announcement by the Uttar Pradesh government that strong hybrid and plug-in hybrid vehicles in the state will be exempted from paying registration fees, has further fuelled the speculation.

Speaking on this, Chaba said that only the string plug-in hybrid vehicles which have the capability to run on battery-powered electric propulsion independent from the internal combustion engine, should be considered for tax benefits. However, those vehicles that use battery packs only for improving fuel efficiency should not be given tax benefits, said Chaba.

He further stated that the GST rates should be based on what's important for the country, environmental friendliness for the car, the ability of the technology used to save import bills, localisation with an independent supply chain and low total cost of ownership. "Strong hybrids will have more preference over petrol and EV will be the best," Chaba further suggested. He said it will at least allow the OEMs to focus on the particular technology they choose to focus on.

JSW MG Motor India to launch five cars by 2025

Speaking about JSW MG Motor India's product launch programme, Chaba said that the auto company intends to launch five new cars in the country in the next one year. Two of them will be premium products and the rest will be mainstream models. The first car among them will be launched in a few months during the festive season. “We have five new products approved to be launched in the next one year. Out of this, two will be premium products and the rest will be the mainstream products. The first product starts in a few months from now in the festive period," Chaba said.

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