Nitin Gadkari advocates for reducing GST on flex-fuel vehicles to 12%

Union Minister for Road Transport and Highways, Nitin Gadkari on Monday said that the state finance ministers should consider reducing Goods and Services Tax (GST) on flex-fuel vehicles to 12 per cent, PTI has reported. At present, a 28 per cent GST is levied on the flex-fuel vehicles, as they come powered by internal combustion engines. This is the same tax slab levied on hybrid vehicles, while electric vehicles are levied with a five per cent GST.

While addressing IFGE's India Bio-Energy & Tech Expo, the minister also reiterated that there is a need to reduce imports of fossil fuels and encourage the use of biofuel. This is not the first time Gadkari advocated for the use of biofuel as he has been encouraging the Indian auto industry the same over the last couple of years.

Speaking on the GST reduction for flex-fuel vehicles, he said that the finance ministers should come forward to support the promotion of biofuel vehicles. “We need support from finance ministers of different states. The Union finance minister assured me that we will try to convince all the finance ministers," he said, adding that, “Yesterday, I asked Maharashtra's FM to attend the GST Council meeting and propose the reduction of GST on flex-fuel engine cars and scooters." Gadkari also said that he had requested Uttar Pradesh Chief Minister Yogi Adityanath to consider reducing taxes on flex-fuel vehicles.

The flex-fuel compatible vehicles can run on more than one type of fuel. These vehicles' propulsion technology has been known for being lesser pollutant emitting compared to pure petrol or pure diesel engine powered vehicles. The flex-fuel vehicles can run on petrol or ethanol or ethanol-blended petrol or methanol-blended petrol. With the blend, the pollutant properties of the petrol gets reduced.

The minister pointed out that every year, India imports fossil fuels of up to ₹22 lakh crore, and it is not only a problem related to air pollution but also an economic problem. "So, now by starting this, a day will come when we will reduce our imports and will encourage bio-fuel," he said, further adding that there is a huge potential in the biofuel sector. According to Gadkari, in the India scenario, the cost of biofuel is less and as there is no pollution, it is going to be advantageous to the common man also.

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