UP tax sop may not apply on Toyota HyCross, Maruti Invicto hybrid cars. Here's why

3 months ago | 44 Views

If you are planning to buy Toyota Innova HyCross or Maruti Invicto MPVs in Uttar Pradesh by availing the tax sop on hybrid cars, you should hold your horses. The list of cars included under the scheme may not include these two models. According to reports, the state government is expected to come up with a clarification on which hybrid cars will be eligible for the tax waiver. Earlier this month, the government announced that hybrid cars sold in the state will not have to pay registration fee in an attempt to promote cleaner mobility.

The state transport authority in UP has said that the tax sop will be applicable to vehicles under the Centre's FAME II subsidy scheme guidelines. According to a report on Economic Times, it has conveyed this message to the stakeholders, including various carmakers who could benefit from the move. Carmakers like Toyota Motor, Maruti Suzuki and Honda would benefit the most from this decision as their strong hybrid models like Innova HyCross, Urban Cruiser HyRyder, Grand Vitara, Invicto and City Hybrid saw their prices drop significantly due to the tax sop.

What the FAME II guideline says

According to the FAME II guidelines, electric and hybrid vehicles priced more than ₹20 lakh will not be considered for subsidy. The subsidy scheme had offered benefits to 55,000 EVs and hybrid cars which are mostly commercial. If the UP state government issues fresh guidelines on availing hybrid car tax sops according to FAME II guidelines, hybrid cars like Innova HyCross and Invicto will miss the bus. Only models like Toyota HyRyder SUV, Maruti Grand Vitara and Honda City Hybrid will stand to benefit.

Debate on whether to reduce tax on hybrid cars

The UP government had issued a notification on July 5 saying that hybrid vehicles in the state will be exempted from paying registration tax. The decision came amid ongoing debate about reducing GST on hybrid cars across the country. Currently, electric vehicles (EVs) in India are taxed at only 5 per cent, whereas hybrid vehicles attract tax as high as 43 per cent.

The demand to reduce tax on hybrid cars is even backed by Nitin Gadkari, Union Minister for Road Transport and Highways. However, the Centre has not taken any decision on this yet. Union Minister Kumaraswamy said it will be discussed in the cabinet and the finance ministry will work on it.