India’s Minister of Road Transport, Nitin Gadkari, emphasized the importance of adopting eco-friendly fuels and urged the public to transition away from environmentally harmful fuels like gasoline and diesel.
Minister of Road Transport, Gadkari Hints At Pollution Tax
He even hinted at the possibility of imposing an extra 10% tax, termed a ‘pollution tax,’ on diesel-powered vehicles and generators if their usage remains excessive. This announcement prompted a significant drop in auto stocks, including Maruti and Tata Motors.
Speaking during the 63rd Annual SIAM convention, Gadkari stated that he would submit a letter to the Finance Minister requesting a 10% GST increase on diesel-powered vehicles. He expressed his intention to raise taxes on diesel to the extent that it becomes challenging to sell diesel vehicles, hoping that the automobile industry would voluntarily reduce diesel usage.
Gadkari emphasized the hazardous nature of diesel as a fuel and its contribution to India’s dependence on imports. He urged people to move away from diesel and warned of escalating taxes on diesel vehicles if they continue to be manufactured.
However, the minister clarified that there is currently no concrete proposal for such a tax increase.
He tweeted, “There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free.”
No Concrete Proposal For Tax Increase
In response to media reports regarding a potential 10% GST hike on diesel vehicle sales, a government statement clarified that there is no such proposal actively being considered. The government emphasized its commitment to achieving a Carbon Net Zero status by 2070 and reducing air pollution caused by hazardous fuels like diesel. It encouraged the adoption of cleaner and domestically-produced alternative fuels.
This statement did not sit well with automakers, especially those producing larger utility vehicles such as SUVs, which are often powered by diesel. As a result, stock prices for companies like Maruti Suzuki and Tata Motors experienced declines.
It’s worth noting that automobiles in India are currently subject to a 28% GST, with additional cess ranging from 1% to 22%, depending on the vehicle type. SUVs incur the highest GST rate of 28%, along with a 22% compensation cess.
