Ministry of Heavy Industries Urges GST Cut on CNG Two-Wheelers from 28% to 5% like EVs
The Ministry of Heavy Industries has proposed reducing GST on CNG two-wheelers from 28% to 5% to boost adoption and reduce carbon emissions
The Ministry of Heavy Industries (MHI) has proposed to the Finance Ministry a reduction in the Goods and Services Tax (GST) on compressed natural gas ( CNG ) two-wheelers. Currently, these vehicles are taxed at 28%, the same rate as petrol-powered two-wheelers. The MHI suggests that the GST rate for CNG two-wheelers be lowered to align with that of electric vehicles (EVs), which are taxed...
The Ministry of Heavy Industries (MHI) has proposed to the Finance Ministry a reduction in the Goods and Services Tax (GST) on compressed natural gas ( CNG ) two-wheelers. Currently, these vehicles are taxed at 28%, the same rate as petrol-powered two-wheelers. The MHI suggests that the GST rate for CNG two-wheelers be lowered to align with that of electric vehicles (EVs), which are taxed at 5%.
This recommendation comes as the government prepares for the upcoming Union Budget 2025. The Ministry of Heavy Industries (MHI) believes that reducing the GST on CNG two-wheelers will make them more affordable, thereby encouraging their adoption and contributing to a reduction in carbon emissions. In 2024, approximately 38,000 CNG two-wheelers were sold in India, a small fraction compared to the 17 million petrol two-wheelers sold in the same period.
Decisions regarding GST rates are made by the GST Council, which is chaired by the Union Finance Minister and includes finance ministers from all states. The Council is currently reviewing various GST rates, and the proposal to reduce the tax on CNG two-wheelers may be considered in these discussions.
What are CNG two-wheelers?
CNG two-wheelers run on compressed natural gas (CNG), offering a cheaper and eco-friendly alternative to petrol vehicles. They produce lower emissions, making them a cleaner choice for daily commuting.
CNG two-wheelers function using a separate CNG tank, with the engine control unit (ECU) managing fuel selection. When CNG is in use, the gas is injected into the engine through high-pressure lines, powering the vehicle efficiently.
In India, the Bajaj Freedom 125 is the world's first CNG motorcycle, featuring a 125cc engine, a 2 kg CNG tank, and a 2-liter petrol tank for dual-fuel flexibility. TVS Jupiter CNG, a CNG-powered scooter, is also expected to launch soon, promising better mileage and lower running costs.
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