Tax On EV: Nirmala Sitharaman shocks Elon Musk, denies news of reduction in import duty on electric vehicles

Tax On EV: Nirmala Sitharaman shocks Elon Musk, denies news of reduction in import duty on electric vehicles

Import Duty ON EV: Finance Minister Nirmala Sitharaman has made it clear that the government has no intention of reducing the import duty on electric vehicles. It was reported by Reuters that the Government of India is preparing a new electric vehicle policy in which import tax on imported electric vehicles can be reduced. 

It was said in the report that after the proposal of Elon Musk’s Tesla, the government may decide to reduce the tax on the import of electric vehicles for such companies which will give assurance of some local manufacturing. According to the report, under the policy, automobile companies will be allowed to import fully finished electric vehicles at only 15 percent imported tax, which currently attracts 100 percent tax. At present, there is a provision of 100 per cent tax on imported vehicles costing more than $40,000, and 70 per cent import tax is imposed on those less than that. 

In June 2023, Prime Minister Narendra Modi went on a US tour. During this visit, Tesla CEO Elon Musk met the Prime Minister. Elon Musk then said that the Prime Minister Narendra Modi also wants Tesla to invest in India. He then indicated that an announcement would be made soon. But before manufacturing in India, Tesla is demanding to reduce tax on electric vehicles in India. But the Finance Minister said that there is no proposal before his ministry to reduce import duty on imported electric vehicles. 

For the past few years, talks have been going on between Tesla and the Government of India regarding Tesla’s investment. Tesla has been trying to enter India since 2021 and has been continuously demanding the government to reduce the duty on imported electric vehicles below 100 percent. The Government of India has been rejecting his demand. Tesla wants to test cars here before setting up a factory in India. But the government is not in a mood to give relief to Tesla. Earlier, Revenue Secretary Sanjay Malhotra has also said that there is no proposal under consideration of the Finance Ministry to give tax exemption to American automobile company Tesla. 

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