We analyze the expected prices of the WagonR-based EV against its petrol-powered variant to assess if the latter presents a stronger case for itself

In a welcome move, the government has proposed to slash GST on electric vehicles from the current 12 to 5 per cent. Early adopters also stand a chance of saving upto Rs 2.5 lakh in tax benefits if they opt for a loan on their EV. These are some significant reforms that are bound to give EVs a much-needed boost in the country. But are these changes convincing enough to make you pick an electric car over its petrol-powered variant? We find out.

For comparison, let’s take the Maruti WagonR, which is sold with an internal combustion engine but will soon have an electric powertrain alternative as well. The WagonR based-EV is expected to get a more expensive price tag. However, the GST cut and income tax sops might be able to offset some of these expenses — or would they?

Maruti WagonR ZXi AMT Maruti WagonR-based EV
Price inclusive of GST (Ex-showroom Delhi) Rs 5.91 Lakh Rs 10 Lakh (expected price)
GST by current standards 18 per cent 12 per cent
GST after reform 18 per cent 5 per cent
Ex-showroom prices after GST reform Rs 5.91 lakh Rs 9.30 lakh

Even with the GST cut, the WagonR Electric is going to be more expensive by Rs 3.39 lakh. So do the income tax sops of upto Rs 2.50 lakh on loan amount savings help the WagonR-based EV’s cause and make it equally affordable? For that, let’s calculate the on-road prices of the two.

Maruti WagonR ZXi AMT Maruti WagonR Electric
Ex-showroom Delhi price Rs 5.91 lakh Rs 9.30 lakh
RTO Rs 25,000 Rs 0 (Also proposed)
Insurance Rs 32,000 Rs 50,000 (estimate)
On-road Price without insurance Rs 6.48 lakh Rs 9.80 lakh
Down Payment Rs 2 lakh Rs 2 lakh
Loan amount Rs 4.48 lakh Rs 7.80 lakh
Total Interest payable Rs 1.10 lakh Rs 1.91 lakh
Yearly Interest Rs 22,000 Rs 38,200
Loan EMI @ 9 per cent interest for 5 years Rs 13,451 per month 16,192 per month
Tax benefit amount Nil Rs 38,200
Estimated savings (For those in the 30 % tax bracket) Nil Rs 11,460 (per year)

 

As we can see here, with the proposed sops for loans on EVs, you stand to save income tax on Rs 38,200 every year, with a loan of 5 years. Essentially, by introducing these sops you can use your EV loan as a tax saving investment and reap its benefit over the tenure of the loan. Think of it as something akin to the tax savings you get when you take a housing loan. While these gains aren’t big, we believe its a step in the right direction and should kickstart EV adoption in India.

Source:- Cardekho.com