Nitin Gadkari issues clarification on proposal of 10% additional GST on diesel vehicles; auto stocks end lower

Additional 10% GST on diesel vehicles: Shares of auto majors Tata Motors, Mahindra & Mahindra (M&M), Ashok Leyland, and Maruti Suzuki India (MSIL) slipped in the afternoon trade on Tuesday, September 11, after Road and Transport Minister Nitin Gadkari said he will seek a "pollution tax" in the form of an additional GST of 10 per cent on diesel vehicles and gensets in order to cut down on air pollution.

Speaking at the 63rd Annual SIAM Convention, the Union Road Transport and Highways Minister said the rising level of pollution is a health hazard for citizens. "I am going to hand over a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles," Gadkari said.

Most of the commercial vehicles in the country currently run on diesel.

Gadkari said the contribution of diesel cars has already come down drastically in the country, and the manufacturers need to stop selling them in the market, according to a PTI report.

At the time of drafting the news, Tata Motors was trading 2.32 per cent lower at Rs 620 on the BSE, while Mahindra & Mahindra (M&M) was down 3.5 per cent at Rs 1,526.70. Ashok Leyland was trading over 3 per cent lower at Rs 179 on the BSE, and Maruti was trading at Rs 10,462, down 0.70 per cent.

However, minutes later, the minister issued a clarification that no such proposal is currently under active consideration by the government.

At close, Tata Motors stood at Rs 620.80, down 2.19 per cent, M&M was down 1.55 per cent at Rs 1,557.60, and Ashok Leyland slipped 2.68 per cent to end at Rs 179.85. The S&P BSE AUTO index was down 1.77 per cent at 36,406.77 points.

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