UP Govt Confirms Road Tax Waiver Policy For Toyota Innova HyCross, Honda City, Maruti Grand Vitara and Toyota HyRyder Hybrids

The Yogi Adityanath-led Uttar Pradesh State Government remains firm on its policy to give a road tax waiver to strong hybrid cars such as the Toyota Innova HyCross, HyRyder, Maruti Grand Vitara and Honda City models. This decision comes as a delegation of car makers including Hyundai, Tata Motors, Bajaj Auto, Mahindra and Kia Motors met the chief secretary of Uttar Pradesh to argue against the road tax waiver for hybrid cars.

Representatives from Maruti Suzuki and Honda Cars India also met the chief secretary in favour of the road tax waiver on hybrid cars. Following the meeting, it’s been indicated the road tax waiver on hybrid cars will be applicable until October 2025, which is when the policy concludes.

Officials from the Uttar Pradesh state government have noted that the road tax waiver for hybrid cars has not affected electric vehicle (EV) sales in the state, and that sales of EVs remain brisk despite the road tax waiver. Also, officials are said to be continuously monitoring sales of hybrid cars and electric vehicles, and could do a rethink on the road tax waiver if EV sales fall drastically.

For now though, hybrid cars such as the Toyota Innova HyCross, Maruti Invicto, Maruti Grand Vitara, Toyota HyRyder and the Honda City enjoy significant price reductions in the state of Uttar Pradesh thanks to the new policy. The new policy has made the Toyota Innova HyCross and Maruti Invicto cheaper by a very significant Rs. 3.3 lakh while prices of the Maruti Grand Vitara and Toyota HyRyder Hybrids have reduced by Rs. 2 lakh. The Honda City Hybrid gets cheaper by Rs. 2 lakh. Even the Toyota Camry Hybrid gets the benefit of the road tax waiver, and is a whopping Rs. 4.4 lakh cheaper in Uttar Pradesh.

UP Govt takes Nitin Gadkari’s GST Waiver Request Forward

While Union Transport Minister Nitin Gadkari requested Union Finance Minister Nirmala Sitharaman for a reduction in GST charged on strong hybrid cars, Ms. Sitharaman did not announce any GST cut on these cars. However, the Yogi Adityanath-led Uttar Pradesh government seems to have paid heed to Mr. Gadkari’s request, albeit with a different approach.

Instead of arguing for lower GST on hybrid cars, which needs the approval of majority of the states in the GST council, the UP government has gone ahead and cut road tax, which is under its control directly. Notably, the transport department is a state subject and state governments have full freedom to decide on taxation policy.

This is what has allowed the UP Government to side step the GST council and go in for the road tax waiver. There’s nothing that the central government or other states can do about the road tax waiver announced by the UP government.

Indian car industry divided

While one section of the car industry that produces hybrid cars – Maruti Suzuki, Toyota and Honda – has come out in favour of the road tax waiver on strong hybrid cars, the rest of the industry is up in arms against this decision. Car makers such as Tata Motors, Mahindra, Hyundai and Kia Motors, all of whom favour electric cars, feel that the road tax waiver on strong hybrid cars will disincentivize electric cars. This may lead to electric car buyers opting for strong hybrid cars instead.

For now though, their apprehensions have proven to be unfounded as EV sales in Uttar Pradesh have not fallen despite the road tax waiver for strong hybrids. However, it may take a while longer before the full impact of the road tax waiver plays out on EV sales. For now though, it’s clearly advantage hybrids at least in the state of Uttar Pradesh. Will more Indian states take a leaf out of the UP playbook and go for road tax waivers on hybrid cars? Only time can tell.

Via CNBC