Diesel Cars To Become More Expensive? Nitin Gadkari Clarifies On Proposed 10 Percent 'Pollution Tax'

Diesel engines are on the verge of extinction, at least in the small car segment, as governing bodies are putting stringent norms for the operations of oil burners. In a new development, the Union Minister Nitin Gadkari said that he will seek a "pollution tax" in the form of additional GST of 10 per cent on diesel vehicles and gensets in order to cut down on air pollution. Speaking at the 63rd Annual SIAM convention here, the Union Road Transport and Highways Minister said the rising level of pollution is a health hazard for citizens. "I am going to handover a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles," Gadkari said.

Most of the commercial vehicles in the country currently run on diesel. In the passenger vehicle segment, various carmakers including Maruti Suzuki India and Honda have already stopped manufacturing diesel cars. Gadkari said the contribution of diesel cars has already come down drastically in the country and the manufacturers need to stop selling them in the market.

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Terming diesel as a hazardous fuel, he noted that the country has to import the fuel to meet the demand. "Say goodbye to diesel... Please stop making them, otherwise we will just increase the tax so much that it would become difficult to sell diesel cars" Gadkari said. He said he will propose additional GST on diesel-powered generators as well.

There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net…

— Nitin Gadkari (@nitin_gadkari) September 12, 2023

Automobiles are currently taxed at 28 per cent GST, with additional cess ranging from 1 per cent to 22 per cent depending on the type of vehicle. SUVs attract the highest GST at the rate of 28 per cent along with a compensation cess at 22 per cent. Gadkari also asked the industry to focus on environment-friendly alternative fuels like ethanol. He also asked the industry to focus on green hydrogen.

However, he later clarified that no such proposal is under active consideration by the government. He quoted on social media platform X, “It is essential to clarify that there is no such proposal currently under active consideration by the government. 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.”