Diesel cars to get costlier? Here is what Nitin Gadkari has to say

Nitin Gadkari, minister for road transport and highways, has denied reports that claimed the government is planning a GST hike on diesel cars.

Published: Sep 12, 2023, 02:21 PM IST

Union Minister Nitin Gadkari has said GST hike on diesel cars is not happening.

Story Highlights

Nitin Gadkari has refuted reports on additional GST on diesel cars.
Several media reports suggest that the government is planning to hike GST.
The sale of diesel cars, however, have slowed down over the past few months.

Union Minister Nitin Gadkari has refuted media reports that suggested a 10 percent GST hike in pollution tax for diesel cars. In his post on X (f0rmerly Twitter), Gadkari said that there was an “urgent need” to clarify that diesel cars are not getting more expensive after several reports about the 10 percent additional GST levy began doing rounds. The reports suggested that the minister is mulling proposing a 10 percent hike in GST diesel passenger vehicles to Finance Minister Nirmala Sitharaman while speaking at the 63rd SIAM Annual Convention in New Delhi.

“There is an urgent need to clarify media reports suggesting an additional 10 per cent 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,” said Gadkari. “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

What’s the current GST structure on diesel vehicles?

According to the current GST structure on passenger vehicles in India, 28 percent GST along with 1 percent to 22 percent cess is levied. The cess levy depends on the size of the car, its engine capacity, and the type of fuel it uses, among other parameters. Had the government moved ahead with the plan to levy 10 percent additional GST, the total tax on diesel cars manufactured in India would have risen to about 60 percent — the highest in the world.

Before Gadkari’s clarification, the plan was deemed fit as part of the government’s efforts to minimise the use of vehicles running on non-renewable resources. The Indian government is bullish about electric vehicles and vehicles that run on biofuel. Over the past few months, the sale of diesel cars in India has reduced dramatically. According to the regional transport office of Uttar Pradesh’s Gautam Budh Nagar, buyers are inclined more towards CNG vehicles, while Kanpur’s local transport department said there is a steep spike in the sales in electric vehicles.