TN cuts VAT on electric bikes to 5% to promote eco-friendly products
March, 28th 2012
The Tamil Nadu government has announced reduction on value-added tax (VAT) by almost 10.5 per cent to encourage electrically-operated two-wheelers (e-bikes). This move would bring down the cost of e-bikes by Rs 2,500-3,000 per unit, according to industry representatives.
In his Budget speech, state finance minister O Pannerselvam said that VAT on e-bikes will be reduced to five per cent from the current 14.5 per cent to promote environment-friendly products.
While welcoming the move, D Raghuram, president (bicycles and fitness), TI Cycles of India, which is into manufacture of e-bikes, said, This is really a progressive move to encourage pollution-free mode of transportation and improve the quality of life. The Delhi government has gone to the level of not only waiving the VAT but also giving incentives, which will add up to around Rs 10,000, he added.
Kumar Kandaswami, leader (manufacturing industry), Deloitte in India, expressed similar views and said that the move came at a time when petrol prices were likely to be increased and there was a possibility for conventional buyers to look at other sources.
The move is definitely an accredited shift. However, the infrastructure issue (electricity to charge the vehicle) needs to be addressed, he said, adding that the infrastructure issue not only pertained to Tamil Nadu but across the country, which was the major roadblock for the industry.