Charging your electric car to get expensive in Karnataka: Other states to follow? – Times of India

Charging your electric car to get expensive in Karnataka: Other states to follow? - Times of India


The electric vehicle adoption in India faces a host of roadblocks, including a considerably lacking charging infrastructure. Adding more reasons to consider purchasing an electric vehicle, the Karnataka Authority for Advance Ruling (AAR) has ruled that the 18% Goods and Services Tax (GST) rate will be applicable to charging electric vehicle (EV) batteries at public charging stations in the state.

The matter was brought before the AAR when a power distribution company named Chamundeshwari Electricity sought to set up multiple public charging stations for electric two and four wheelers.

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The main issue at hand for the company was to identify whether the energy charges should be categorised as a supply of goods or a supply of services. If considered a supply of goods, the company could claim GST exemption, as electricity, being classified as a good, is exempt under the Act. Hence, it fell upon the AAR to determine whether EV charging should be treated as a supply of electricity or not.
The AAR ruled that an EV involves converting electric energy into chemical energy within the battery. It said that the power used during the charging of EV batteries is a consumable, since the electricity is being used in the premises of the owner of the charging station. Basically, when an EV owner charges its vehicle on a public station, they are utisiling the facilities and services of the EV charging station, thus will be liable to GST.
As a result, the AAR clarified that charging an EV should be considered a supply of service, not a supply of electricity or any movable property.
It remains to be seen if other states follow Karnataka’s suit and charge a 18% GST on EV charging. If it happens, it will surely become a point of consideration for potential EV buyers and will, in a way, countervail the effects of various schemes and benefits the government is offering to fuel the EV adoption rate in the country.


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