GST rates on Electric Vehicles whether or not fitted with a battery pack- CBIC clarification
The CBIC issued Circular No. 179/11/2022- GST dated 03rd August 2022 clarifying on various issues including GST rates & classifications of Electric Vehicles (EV). The Circular reads as follows:
- Representations have been received seeking clarification regarding the applicable rate of GST on electrically operated vehicle without any battery fitted to it.
- The explanation of ‘Electrically operated vehicles’ in entry 242A of Schedule I of notification no. 1/2017- central tax (rate) read as: ‘Electrically operated vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include E-bicycles’.
- As is evident from the explanation above, electrically operated vehicle including three wheeled electric vehicle means vehicle that runs solely on electrical energy derived from an external source or from electrical batteries. Therefore, the fitting of batteries cannot be considered as a concomitant factor for defining a vehicle as an electrically operated electric vehicle.
- It is also pertinent to state that the WCO’s HSN explanatory notes have also not considered batteries to be a component, whose absence changes the essential character of an incomplete, unfinished or unassembled vehicle.
- Also, the HSN explanatory notes for Chapter 87 have clearly stated that Motor Chassis fitted with cabs i.e. the chassis fitted with cabin body falls under 87.02 to 87.04 and not in heading 87.06.
- In view of the above, it is clarified that electrically operated vehicle is to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply and thereby attracts GST at the rate of 5% in terms of entry 242A of Schedule I of notification No. 1/2007- Central Tax (Rate).
Source: CBIC Circular No. 179/11/2022-GST
