GST Rate Rationalisation for Green Logistics What IFTRT Recommends
The focus keyphrase “GST rate rationalisation” has once again made headlines—this time, as a strategic lever to boost India’s green logistics ecosystem.
In its latest representation, the IFTRT (Indian Foundation of Transport Research and Training) has called on the government to rationalise GST rates for electric vehicles, EV battery swapping, and warehousing services. This move, the foundation believes, can unlock sustainable growth in India’s supply chain sector.
Let’s break this down.
Why GST Rate Rationalisation Matters for Green Logistics
What IFTRT Suggests
Here are the key reforms suggested by IFTRT:
- Lower GST on warehousing services: Currently taxed at 18%, IFTRT recommends bringing it down to 12% for third-party logistics (3PL) and integrated green warehousing.
- Electric truck leasing & rentals: These services attract GST of 28%, which is significantly higher than the 5% levied on EV purchases. Rationalising this anomaly is crucial.
- Battery swapping ecosystems: Input tax credit (ITC) issues and ambiguity on tax rates discourage investment. A flat 5% GST rate for battery leasing and swapping is recommended.
- EV charging stations and infrastructure: Requests include a uniform GST rate of 5% to promote network growth.
GST Rate Comparison Table
| Service/Item | Current GST Rate | Proposed Rate by IFTRT |
|---|---|---|
| EV Purchase | 5% | 5% (unchanged) |
| EV Leasing/Rental (Heavy Vehicles) | 28% | 5–12% |
| Battery Swapping (Battery as Service) | 18% or more | 5% |
| EV Charging Infrastructure | 18% | 5% |
| Warehousing Services (3PL/Green) | 18% | 12% |
Legal References and Government Sources
- Notification No. 12/2017 – Central Tax (Rate): Governs exemptions and rates for transportation and warehousing.
- Press Release from CBIC (July 2019): Confirmed 5% GST rate on EVs, but no clarity for leasing or infrastructure.
- NITI Aayog’s Battery Swapping Policy (Draft, 2022): Highlighted taxation challenges in the EV energy ecosystem.
Expert View: A Missed Opportunity So Far
“Without GST parity, logistics players will find it hard to switch to green modes. Rationalisation isn’t just about lower taxes—it’s about giving the right signals,” says CA Rakesh Bansal, a supply chain tax consultant.
How GST Rate Rationalisation Can Help India
- Reduces logistics cost: India’s logistics cost is ~13% of GDP. Greener and tax-efficient supply chains can bring it down.
- Boosts EV adoption: Lowering rate anomalies will support faster EV onboarding in commercial fleets.
- Aligns with climate goals: India targets 30% EV penetration by 2030. Fiscal policy plays a key role.
Call for Action: What’s Next?
With the upcoming GST Council meeting, stakeholders are hopeful that the Council considers these IFTRT suggestions under its tax rationalisation agenda, especially as India eyes global leadership in sustainable mobility.
FAQs on GST Rate Rationalisation for Green Logistics
Q1. Are EV rentals and purchases taxed at the same GST rate?
No. EV purchases attract 5%, while rentals can attract up to 28%.
Q2. Is warehousing always taxed at 18%?
Yes, currently it’s taxed at 18%. But IFTRT recommends lowering it to 12% for green 3PL services.
Q3. Does GST apply to battery swapping stations?
Yes. However, there’s ambiguity in treatment. IFTRT seeks clarity and a uniform 5% rate.
Summary
GST rate rationalisation is key to boosting green logistics in India. IFTRT recommends lower GST on warehousing, EV leasing, and battery swapping to promote sustainable supply chains.