The GST Policy of the Government of India has once again come to the news over the recent controversy regarding luxury electric vehicles, sparking yet another debate. The issue is regarding the tax disparity between luxury EVs and basic petrol cars, making it an issue widely and directly affecting the public.
The BMW i7 M70, priced at a whopping ₹2.38 crores, has a shockingly marginal GST rate of a mere 5%. When visualizing the rate in absolute numbers, it comes out to be just ₹11.9 lakhs in GST. Now this may not mean anything on its own, but when it is compared to the GST rate on conventional petrol cars included with CESS, which sits at around 29% to a whopping 50%, the difference becomes all too real. For instance, the Innova Hycross, which costs ₹20.65 lakhs, has an on-road price of ₹39.55 lakhs, almost double the original cost!
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The tax breaks for luxury EVs in India even beat those of the developed countries. In the case of the i7, the tax break, amounting to ₹1.52 Crores, puts the developed countries to shame. For each i7 sold, there could have been 6 new buses on the roads instead, if not for these tax breaks.
It doesn’t end here. The tax rates on customizations and upgrades of these ultra-luxury EVs also sit at a mere 5%, making it a lucrative deal for the rich, and widening the already much-existent economic divide between the people.
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High taxation is not something the Indian public is new to. From simple consumables like edible oils, ghee, and pickles to sectors like electronics and automobiles, we have seen the GST rate in India go as high as 28%. This puts a very heavy and often unshakable burden on the backs of the poor and the middle class alike, while the ones who can afford luxury get that luxury in their tax breaks as well.
The tax system is flawed and needs to be mended so that it serves the needs of society as a whole, rather than creating a wider divide with each passing moment. The policymakers must address these concerns and work towards a better system, so that the Indian public as a whole, can benefit from it.
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