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GST Council Proposes Lower 5 Percent Tax Rate for EV Passenger Transport
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Moneycontrol•13-10-2026, 17:43
GST Council Proposes Lower 5 Percent Tax Rate for EV Passenger Transport
- •The GST Council has proposed a reduced 5 percent tax rate for passenger transport and vehicle rental services utilizing electric vehicles.
- •The new proposal applies to passenger transport and motor vehicle rentals with operators where services are provided using an EV.
- •To qualify for the concessional 5 percent rate, the cost of battery charging must be included in the total consideration.
- •The proposed rate comes with restrictions on claiming input tax credit, unlike the current 18 percent GST structure which allows ITC benefits.
Key Questions Answered
The GST Council has proposed a lower GST rate of 5 percent for passenger transport and motor vehicle rental services using electric vehicles, subject to restricted input tax credit and provided battery charging costs are included.
For the concessional 5 percent GST rate to apply to electric vehicle rentals and passenger transport, the service must be supplied using an electric vehicle, input tax credit availability will be restricted, and the cost of battery charging must be included in the total consideration.
At present, an 18 percent GST rate is applicable on passenger transport services and rental services of electric motor vehicles, which includes the benefit of claiming full input tax credit.
