GST Council may bring rate on  li-ion cells  on par  with  EVs

India may cut the goods and services tax on lithium-ion batteries and bring them on a par with taxes on electric vehicles to give a fillip to its green mobility plans.

Discussions have begun among various stakeholders in the Union government on ways to proceed with the plan, which is crucial to making the country a global manufacturing hub for electric vehicles (EVs).

Currently, EVs are taxed at 5%, while lithium-ion batteries are taxed at 18%. 

There have been considerations of tax rationalization on lithium-ion batteries earlier, but with the push for battery swapping policy, the talks have again gained momentum, said people in the know of the developments.

The NITI Aayog, the ministries of new and renewable energy, heavy industries, and other government departments held their first meeting on Tuesday on the battery-swapping policy. 

This followed receipt of suggestions and recommendations on the draft policy until 5 June. 

Along with tax rationalization, standardization of batteries to ensure interoperability was also on the agenda of the meeting, the people said.

NITI Aayog, however, would not delve much on the goods and services tax (GST) issue as it is under the finance ministry's purview, they said, adding that the policy think tank can at best send a recommendation on tax rationalization.

Any decision on changing GST would have to be taken by the GST Council.

The council last cut GST rate on lithium-ion batteries from 28% to 18% in 2018. 

Now, with greater emphasis on the EV ecosystem and more automakers entering the fray, there is a renewed chorus for a price parity between batteries and EVs, as the latter is taxed much lower at 5%.

In December, NITI Aayog chief executive Amitabh Kant said the government is working on reducing GST on EV batteries. 

Further, the draft policy issued by the think tank recommended the rationalization of tax on batteries.