The 36th GST Council Meeting was held via video conferencing on Saturday, July 27, 2019. It was initially scheduled for July 25, 2019, but was postponed further to be held two days later.
The meeting was conducted under the chairmanship of Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman. The principal agenda of the 36th GST Council meeting was to slash the GST rates on Electric Vehicles (EV) in order to provide support to the EV manufacturers.
The council in its 35th GST Council Meeting had considered issues regarding concessions on EV manufacturing, electric chargers and hiring of EVs. But these were suggested to be scrutinized by the Fitment Committee and discussed further in the next meeting.
The government, via Union Budget 2019, announced direct tax benefits for taxpayers buying Electric Vehicles.
Here are the key recommendations made by the GST council in the meeting:
I. Cut GST Rates to Support Electric Vehicles Industry
The Council slashed GST rate on all Electric Vehicles from the current rate of 12% to 5%. Further, it also reduced the rate on charger or charging stations of Electric Vehicles from 18% to 5%. In addition to this, the council recommended to exempt GST on hiring of electric buses by local authorities. Provided these buses have a carrying capacity of more than 12 passengers.
FAME India – Phase I
Department of Heavy Industry (DHI) launched the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME India) scheme. This was rolled out on March 13, 2015 to promote electric and hybrid vehicles in India. The Phase I of FAME India scheme was approved for two years initially, beginning April 1, 2015. This was however extended multiple times, with the current extension being up to March 31, 2019.
FAME India – Phase II
With the outcome of the FAME Phase I, FAME Phase II was rolled out. This outlined the demand incentives and aid to be extended for the development of charging infrastructure and administration of the scheme. The scheme was suggested to be executed over a period of three years starting April 1, 2019.
But, FAME Phase II was condemned by the EV manufacturers for supporting commercial vehicles over the ones meant for personal mobility.
With the slashing of GST rates on EV sector, the EV manufacturers of both commercial and personal mobility vehicles will certainly get a boost.
EVs are currently priced higher as compared to petrol and diesel cars. Therefore, lower GST rates on EVs will help the manufacturers in bringing the EV prices down.
The government is in the wake of providing necessary support to the EV industry. This is to allow for faster adoption of electric mobility and the development of its manufacturing setup in India. Earlier this month, the government announced the direct tax concessions for the taxpayers who would purchase Electric Vehicles. The government has proposed to provide additional income tax deduction of Rs. 1.5 lakh on the interest paid on loans taken to purchase electric vehicles.
These changes in GST rates would be effective from August 1, 2019.
II. Extension of Various Time Limits For Taxpayers Under Composition Scheme
The council extended the due date for filing intimation for availing Composition Scheme via GST CMP- 02 until September 30, 2019. This extension of time limit is only for service providers notified under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019. The due date is extended from the earlier date of July 31, 2019.
GST CMP 02 is a form in which a person already registered under GST opts to switch for composition scheme. This is basically an intimation form that needs to be filed by the existing registered taxpayer under GST opting to pay taxes under Composition Scheme.
The council also extended the due date for filing statement containing details of self – assessed tax in form GST CMP – 08 for the quarter April 2019 – June 2019. The time limit has been extended from July 31, 2019 to August 31, 2019. This is done for all the taxpayers registered under composition scheme.