No proposal to levy additional 10% GST on diesel vehicles: Nitin Gadkari

Moments after news surfaced on Tuesday that road and transport minister Nitin Gadkari requested finance minister Nirmala Sitharaman to impose an additional 10 per cent GST on diesel engines/vehicles to phase them out in the near future, the minister clarified that there was no such proposal in the pipeline. 

In a tweet, the minister said, "There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free."

There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net…

— Nitin Gadkari (@nitin_gadkari) September 12, 2023

Earlier, news surfaced that speaking at the 63rd Annual SIAM convention in New Delhi, Gadkari had proposed a new formula to phase out diesel vehicle/engines and gensets from India. 
"I am requesting the finance minister to impose an additional 10 per cent GST on diesel vehicle/engines, this is the only way to phase out diesel vehicles," he was quoted as saying by PTI.  

Automobiles are currently taxed at 28 per cent GST, with additional cess ranging from 1 per cent to 22 per cent depending on the type of vehicle.

SUVs attract the highest GST at the rate of 28 per cent along with a compensation cess at 22 per cent.

The government is making some serious efforts to phase out diesel vehicles from the roads.

In May, a panel formed by the Ministry of Petroleum and Natural Gas recommended a ban on the use of four-wheeler diesel vehicles and set a deadline for 2027 for it.

The panel had also recommended that the pan-India city transport system should also be a mix of metro trains and electric buses by 2030.

At present, the Indian transport system heavily depends on diesel vehicles, as 80 per cent of vehicles in road transport run on diesel.

Diesel-powered vehicles contribute to about 40 per cent of total vehicle sales in India.

Not just the goverment, but some leading automobile companies in the private sector are also keen to end the production of diesel vehicles.

Carmakers such as Maruti Suzuki India and Honda have already stopped manufacturing diesel cars. 

During his speech, Gadkari too lauded the efforts of carmakers for cutting down on the production of diesel vehicles. 

In the passenger vehicle segment, various carmakers including Maruti Suzuki India and Honda have already stopped manufacturing diesel cars.

Terming diesel as a hazardous fuel, he noted that the country has to import the fuel to meet the demand. "Say goodbye to diesel... Please stop making them, otherwise we will just increase the tax so much that it would become difficult to sell diesel cars" PTI quoted Gadkari as saying.

Gadkari also asked the automobile industry to focus on environment-friendly alternative fuels like ethanol. He also asked the industry to focus on green hydrogen.

(With inputs from PTI)