CNG Vehicles Seek Tax Relief As Budget Nears

1/30/2025 4:07:09 AM

(MENAFN- KNN India) New Delhi, Jan 30 (KNN) As the Union Budget approaches, the Ministry of Heavy Industries and auto industry representatives have renewed their demand for tax concessions on CNG vehicles, which were once considered a beacon of cleaner transportation.

A key ask from the industry is the reduction of the Goods and Services Tax (GST) on CNG vehicles from the existing 28 per cent to a level comparable with electric vehicles, which attract only a 5 per cent levy.

Despite sustained lobbying, the government has remained firm in its focus on promoting electric vehicles (EVs) and has notably resisted pressure from major Japanese automakers to lower taxes on hybrid cars.

Finance Minister Nirmala Sitharaman has, so far, refrained from making GST-related announcements in the budget, as taxation matters are under the purview of the GST Council, which comprises state finance ministers.

However, the latest demand from the auto sector gains significance as a ministerial panel is currently reviewing GST rationalisation across various categories.

Additionally, another group of ministers is deliberating on the issue of cess, which is levied over and above the 28 per cent GST on automobiles.

Industry insiders argue that reducing GST on CNG vehicles could serve as a pragmatic intermediate step in the transition to cleaner mobility, especially as EV adoption remains slow due to infrastructure constraints.

Whether the government heeds the demand remains to be seen, but the coming weeks could be crucial in shaping the tax framework for the auto sector.

(KNN Bureau)

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