UP hybrid vehicle tax cut may soon be revised

The Uttar Pradesh state transport authority has now informed carmakers that the road tax waiver for strong-hybrid vehicles will be applicable only on vehicles that qualify for the FAME II subsidies. According to ET Auto, the transport authority had conveyed this via a letter dated July 9. Our dealer sources, however, have revealed that this has not come into effect yet, and they are awaiting clarifications from multiple stakeholders.

UP hybrid vehicle policy: what does it cover

The FAME II subsidy for four wheelers is extended to as many as 55,000 EV and hybrid vehicles used for commercial use, so privately registered vehicles will not qualify for the road tax waiver. Additionally, the FAME II benefits are only applicable on vehicles priced under Rs 20 lakh (ex-showroom), and if this update comes into effect, only select hybrid variants of the Grand Vitara and Hyryder would qualify for the waiver.

This development comes after a few car brands, who have EVs in their portfolio, raised concerns on the road tax waiver for hybrid vehicles. The updated policy will most likely not have a blanket exemption and offer incentives to only certain categories of strong hybrids. Final guidelines with respect to incentives on hybrids and EVs will be announced soon, said sources.

UP hybrid vehicle policy: the background

The UP Industries Department had said on July 5 that it would waive road tax on hybrid and plug-in hybrid vehicles sold on or after July 1. At present, a 5 percent tax is levied on EVs, 43 percent on hybrids and 48 percent on petrols. The policy has reduced the on-road prices of models like the Hyryder and the Hycross by up to Rs 3.11 lakh, thus reducing the premium one pays for hybrids over petrol vehicles.

UP hybrid vehicle policy: what are the dealers saying?

A few Toyota and Nexa dealers we spoke to in UP informed that, for now, the road tax waiver hasn't been withdrawn. However, private car buyers are being informed that they may not get these benefits at the time of registeration, if these new rules come into effect. All-in-all, it’s a make hay while the sun shines situation for a hybrid vehicle buyer in UP at the moment.

With inputs from Radhika Dave