India tax panel calls for steep levies on luxury EVs in blow for Tesla, BMW

NEW DELHI: An Indian tax panel has proposed steep increases in consumer levies on luxury electric cars priced above $46,000, a government document showed, a move that could impact sales of carmakers such as Tesla, Mercedes-Benz, BMW and BYD.

Prime Minister Narendra Modi is aiming to reform India’s tax system and is pushing Indians to use more domestic goods just when relations with the United States have soured due to high tariffs. His government has recommended hefty cuts on goods and services tax (GST) that could make everything from shampoos to electronics cheaper.

The key panel tasked with making rate suggestions to India’s powerful GST Council has backed sweeping cuts to many items in line with Modi’s overhaul, but it has called for raising taxes on electric cars, the document detailing its recommendations showed.

The tax panel recommended raising the GST rate to 18% from 5% currently for EVs priced between 2 million and 4 million rupees ($23,000-$46,000). It also proposed hiking the tax to 28% for cars priced above $46,000, saying that such vehicles cater to the “upper segment” of society and are largely imported rather than manufactured domestically.