No specific proposal as of now for GST hike on diesel vehicles, says Indian minister Nitin Gadkari

After reports emerged Tuesday afternoon (September 12) that the government is planning a 10 per cent GST hike on the sale of diesel vehicles, Union Road Transport Minister Nitin Gadkari issued a clarification denying any concrete plans right now.

Taking to X, formerly Twitter, Gadkari wrote, "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."

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Earlier in the day, while speaking at the 63rd Annual SIAM convention, Gadkari flagged an urgent need to move away from fuels like petroland diesel.

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“I am going to hand over a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles. We will increase tax on diesel to the extent it will be difficult to sell it," Gadkari said.

"Hope automobile industry will take suo moto initiative to cut down diesel usage," he added.

He further said that he is planning to meet Finance Minister Nirmala Sitharaman later in the dayto request the GST hike.

At the convention, he reached out to the automobile industry and asked them to cut down on diesel usage, otherwise, the government would have to impose a 10 per cent"pollution tax" which would make it difficult for the industries to sell diesel vehicles.

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"Reduce diesel vehicle production or else I will increase tax," he warned.

Following Gadkari's remarks, shares of automobile companies took a plunge, with shares of Tata Motors, Mahindra & Mahindra, and Ashok Leyland registering a fall of around 2.5 per cent.

Shares of tractor manufacturing companies like Escorts Kubota and Swaraj also reported a downfall of 3 per cent followed by oil marketing companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum trading with losses of 3-4 per cent.

(With inputs from agencies)

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