Reports of extra 10% GST on diesel cars false, says Union Minister Gadkari

Nitin Gadkari said that it is essential to clarify that there is no such proposal currently under active consideration by the government

Nitin Gadkari, Union Minister for Road Transport and Highways, has denied reports claiming that he is set to propose 10 per cent additional GST on the purchase of diesel vehicles.

"There is an urgent need to clarify media reports suggesting an additional 10 per cent goods and services tax (GST) on sale of diesel vehicles.

Gadkari tweeted on X (formerly twitter): "It is essential to clarify that there is no such proposal currently under active consideration by the government."

He further said, "In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free."

The reports claimed that the union minister was ready to propose an additional 10 per cent GST on the purchase of diesel cars in India.

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The reports further said that Gadkari cautioned automakers about increased levies if they continue to sell highly polluting vehicles.

According to media reports, Gadkari's comments came during the New Delhi automakers conference where executives of Tata Motors, Mahindra and Mahindra, Maruti Suzuki and foreign car companies such as Mercedes and Volkswagen were gathered.

According to the reports, Gadkari, at the New Delhi automakers conference, said he would ask Finance Minister Nirmala Sitharaman for an "additional 10 per cent" GST on diesel vehicles.

He also said there has been a decline in the production of diesel cars since 2014, when they accounted for 52 per cent of the total production, but now they make up 18 per cent.

Currently, the government imposes a 28 per cent tax on diesel cars, and an additional cess is levied depending on the vehicles' engine capacity.

Fall in shares following the reports

After the reports surfaced, shares of auto and related companies fell up to 4 per cent on Tuesday.

According to a report in The Economic Times (ET), Ashok Leyland and Tata Motors were each three per cent down, and Maruti and Hero MotoCorp declined 0.5 per cent and 0.8 per cent, respectively.

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The Bharat Petroleum Corporation Limited (BPCL) was down by 3.3 per cent, the Indian Oil Corporation (IOC) was down 3.5 per cent, and the Gas Authority of India Limited (GAIL) dropped by 5.3 per cent.