India Development News & Foreign Investment Opportunities

Enhanced Budget Allocation for Development of Highways Grid

Lowering GST on e-vehicles to 5% sought


Sought: Lower GST on e-vehicles at 5%



Transport sector has been allocated enhanced outlay of Rs.83,000 crore in the Union Budget presented on 5 July 2019, which the Finance Minister said will help carry out a comprehensive restructuring of National Highway Programme to ensure that the National Highway Grid of desirable length and capacity is created using financeable model.

Last year’s budgetary allocation was Rs.78,626 crore.

Elaborating, Minister Nirmala Sitharaman said that after completing the Phase-1 of Bharatmala, states will be helped to develop State road networks in the second phase.

Boosting infrastructure development will be the Central Road and Infrastructure Cess on petrol and diesel which has been raised by Rs.1 per litre.

The Budget has also outlined various proposals for giving a boost to manufacturing of electric vehicles and developing India as a global hub for the same.

Under Phase-II of the FAME Scheme, only advanced battery and registered e-vehicles will be incentivized, with greater emphasis on providing affordable and environment friendly public transportation options for the common man.

The main objective of the Scheme is to encourage faster adoption of electric vehicles through upfront incentive on purchase of such vehicles and also by establishing the necessary charging infrastructure for the same.

Phase II of FAME has an outlay of Rs.10,000 crore for a period of 3 years and has commenced from 1 April 2019.

The inclusion of solar storage batteries and charging infrastructure in the FAME scheme will give a boost to manufacturing, which is needed for India to leapfrog and become a global hub for manufacturing of these vehicles.

The Government has already moved GST council to lower the GST rate on electric vehicles from 12% to 5%, said the Minister.

Also, to make electric vehicles affordable to consumers, the Union Budget says the government will provide additional income tax deduction of Rs.1.5 lakh on the interest paid on loans taken to purchase electric vehicles.

This amounts to a benefit of around Rs.2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle.

To further incentivise e-mobility, customs duty is being exempted on certain parts of electric vehicles.

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