Indian Sugar Mills Association Calls For 5% GST On Flex Fuel Vehicles

ISMA in it’s statement said that flex fuel vehicles (FFVs) are currently charged a GST at 28 per cent, while the electric vehicles are charged just 5 per cent GST.

Currently, India has achieved E10, which represents 10 per cent ethanol in petrol, and aims to achieve E20 by 2025.

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The Indian Sugar Mills Association (ISMA) called for a change in the Goods and Services Tax (GST) rate applied on vehicles using flex fuels. The sugar industry body urged for flex fuel powered vehicles to be charged at the same GST rate as electric vehicles. 

According to a PTI report, ISMA in it’s statement said that flex fuel vehicles (FFVs) are currently charged a GST at 28 per cent, while the electric vehicles are charged just 5 per cent GST. ISMA President Aditya Jhunjhunwala requested the Ministry of Road Transport and Highways to adopt a relaxed GST approach towards FFVs. 

The association stated that to promote the method of blending ethanol and petrol for fuel, the ministry should look into making changes in the GST rates levied on FFVs. Flex fuel vehicles use a mixture of petrol and ethanol to power automobiles. Currently, India has achieved E10, which represents 10 per cent ethanol in petrol, and aims to achieve E20 by 2025.

Jhunjhunwala also noted that this move will help reduce India’s fuel bills and simultaneously control the transportation sector’s carbon emissions. He added, “We request parity in the GST rebate for FFVs,” and stressed that this move will help consumers to ‘embrace environmentally conscious choices without bearing disproportionate financial burdens’.

The association president also noted that tax deductions on FFVs will ‘incentivise the adoption of eco-friendly vehicles’. Further, Jhunjhunwala added that ISMA is in talks with the Automotive Research Association of India (ARAI) to work towards developing anhydrous ethanol blends with gasoline. 

Currently, the government has set the target of achieving 12 per cent blending of ethanol with petrol for 2022-23 ethanol supply year, ending in November, the report stated. Ethanol is majorly acquired from sugar mills, and rice and maize.

Brazil’s successful integration of such mixes has been an inspiration for India to work towards cleaner fuel alternatives.