Budget 2023 brings More Tax Benefits for Electric Vehicles [Read Finance Bill]

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Presenting the Union Budget 2023, Finance Minister Nirmala Sitharaman announced that the subsidies on Electric Vehicle (EV) batteries will be extended for 1 more year, hence making EVs cheaper in India.

“I propose to continue the concessional duty on lithium-ion cells for batteries for another year”, said Finance Minister Nirmala Sitharaman. In May 2021, govt launched the Production Linked Incentive (PLI) scheme for manufacturing batteries. Govt has also doubled the funds in the FAME scheme.

The PLI scheme was aimed to bring down prices of this core key component of electric vehicles. The Goods and Services Tax (GST) on sale of electric vehicles was reduced from 12% to 5%. 

The Union Budget 2023 made Green Growth one of the top 7 priorities. The Pro-EV budget focuses on much-needed initiatives such as Customs Duty reduction from 21% to 13% on Lithium Batteries and an extension of the subsidies on EV batteries for one more year and these are welcome initiatives as these will help boost the demand.

The policy on the replacement of old polluting vehicles should accelerate the transition towards electric vehicles which is in line with the budget’s aim to spur eco-conscious lifestyles and the government’s dedication to promoting environmental sustainability, as emphasized by Finance Minister in the recent Union Budget 2023, is a commendable development.

“To further provide impetus to green mobility, Customs duty exemption is being extended for the import of capital goods and machinery required for manufacturing lithium-ion cells or batteries used in electric vehicles,” Mrs Sitharaman said in her Budget speech.

The Finance Minister said that in addition to the vehicle scrappage policy announced in Budget 2021-22, more funds have now been allocated to support efforts to scrap old vehicles under the central government. States will also be supported to help them scrap old vehicles and old ambulances.

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