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Madhya Pradesh abolishes taxes on battery-operated vehicles

In a bid to check growing pollution, the Madhya Pradesh government has decided to abolish tax on all battery-operated vehicles including rickshaws.

Presenting his fourth budget on Friday, Madhya Pradesh finance minister Jayant Mallaiya said the government’s move is to encourage use of environment-friendly vehicles.

He also reduced the VAT on cars bought by army and other defence service employees from canteen stores department from 15 per cent to four per cent.

Many state governments offer tax exemption on purchase of electric vehicles. Last year, for instance, the Indian government extended subsidies for those buying e-vehicles and hybrid vehicles, depending on the speed and efficiency of the vehicles.

The manufacturer of an e-vehicle or a hybrid one gets reimbursed by the government within 60 to 90 days. This is part of the government’s Faster Adoption and Manufacturing of Electric vehicles (FAME) scheme.

The government had also formulated a National Electric Mobility Mission Plan, which envisaged that there would be seven million electric and hybrid vehicles on Indian roads by 2020.

But some states levy VAT ranging from 12 to 14 per cent of electric vehicles. Manufacturers of e-vehicles say that this is defeating the very purpose of the central government’s subsidy scheme.