K'taka authority imposes 18% service tax on EV battery charging; EV Industry worried

NT Correspondent

Bengaluru: Electric vehicle (EV) buyers and owners have received an unwelcome development as the Karnataka Authority for Advance Ruling (AAR) recently declared that a service tax of 18% will apply to charging electric batteries.

This ruling came in response to a petition filed by the Chamundeshwari Electric Supply Company (CESCOM) seeking clarification on whether battery charging should be classified as a supply of goods or services.

The Karnataka AAR determined that battery charging falls under the category of service and will be subject to the existing 18% service tax rate. However, they also stated that the unit would be eligible for the benefit of input tax credit (ITC).

This decision could pose challenges for the establishment of electric vehicle charging units, as seen in the case of CESCOM, which intended to set up EV charging points.

Moreover, the impact of this rul - ing is not confined to Karnataka alone; it extends nationwide, potentially affecting numerous companies looking to generate additional revenue by installing EV charging stations.

It is worth mentioning that Karnataka ranks third in the country regarding electric vehicle sales, with Uttar Pradesh being the largest buyer of electric vehicles, followed by Delhi. Data also indicates that while three or more EVs are sold in Uttar Pradesh, Karnataka only records the sale of one EV for every similar period.