India’s road transport minister plans to submit a proposal to the finance ministry to levy an additional 10% GST on diesel engine vehicles, a move aimed at boosting climate-friendly vehicles in one of the most polluted countries. Calling it a ‘pollution tax’, Nitin Gadkari at the 63rd SIAM Annual Convention said his proposale is the only way to reduce the usage of diesel vehicles in the country.

“Request industry to reduce production of diesel vehicles else imposing additional tax will be necessary,” Gadkari said. “I would urge you to reduce production of diesel vehicles. If you don’t reduce, we have to increase taxes. We will increase taxes so much, you will find it difficult to sell diesel vehicles”, Gadkari said.

Following this several media reports said ‘Centre is likely to impose additional 10% GST on the sale of diesel vehicles’. Soon after, auto stocks, including Maruti and Tata Motors, fell sharply.

Later clarifying the same, Gadkari took to Twitter, saying, 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 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.

Commercial and bigger utility vehicles are largely run on diesel, meanwhile, some industrial machines and engines such as generators also use diesel.

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.

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