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  5. Auto stocks recover after Gadkari clarifies his '10% additional GST on diesel vehicles' comment

Auto stocks recover after Gadkari clarifies his '10% additional GST on diesel vehicles' comment

Auto stocks recover after Gadkari clarifies his '10% additional GST on diesel vehicles' comment
  • M&M, Ashok Leyland and Tata Motors have recovered from their intraday low.
  • Gadkari while speaking at a SIAM conference had said that the rising level of pollution is a health hazard for citizens.
  • There is no such proposal currently under active consideration by the government, said Gadkari in is clarification


The auto index, Nifty Auto, recovered from its 400 point or approximately 2.5% fall after Union Minister Nitin Gadkari clarified on Tuesday clarified his '10% additional GST on diesel vehicles' comment made earlier in the morning. At the time of updating the story, the index is 1.6% in the red.

Auto stocks had fallen sharply after Gadkari said he will seek a "pollution tax" in the form of additional GST of 10% on diesel vehicles and gensets in order to cut down on air pollution. This in turn has dragged the stocks down as most of the commercial vehicles in the country currently run on diesel.

At the time of updating, Mahindra and Mahindra is down 1.7% but shown a recovery from the 3.48% slide. Ashok Leyland has now recovered slightly too and is down 2.4% while Tata Motors which had slipped 2.8% is now down 1.8%.

The Road and Transport Minister has subsequently clarified his comment on X (formerly Twitter). He said that that there is no such proposal currently under active consideration by the government.




Earlier, speaking at the 63rd Annual SIAM convention Delhi, the Union Road Transport and Highways Minister said the rising level of pollution is a health hazard for citizens.

"I am going to handover a letter to the Finance Minister this evening stating that an additional 10% GST be put on diesel-powered vehicles," Gadkari said.

In the passenger vehicle segment, various carmakers including Maruti Suzuki India and Honda have already stopped manufacturing diesel cars.

Gadkari said the contribution of diesel cars has already come down drastically in the country and the manufacturers need to stop selling them in the market.

Terming diesel as a hazardous fuel, he noted that the country has to import the fuel to meet the demand.

"Say goodbye to diesel... Please stop making them, otherwise we will just increase the tax so much that it would become difficult to sell diesel cars" Gadkari said.

He said he will propose additional GST on diesel-powered generators as well.

Automobiles are currently taxed at 28% GST, with additional cess ranging from 1% to 22% depending on the type of vehicle.

SUVs attract the highest GST at the rate of 28% along with a compensation cess at 22%.

Gadkari also asked the industry to focus on environment-friendly alternative fuels like ethanol. He also asked the industry to focus on green hydrogen.

Explained: What is ethanol blending and what are the challenges faced by India

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