Maharashtra Govt Withdraws 6% Tax on Luxury EVs

The Maharashtra government has decided to withdraw the proposed 6% motor vehicle tax on electric vehicles (EVs) priced above ₹30 lakh, Chief Minister Devendra Fadnavis announced. The move comes amid the rising adoption of EVs in the luxury segment, which accounted for 5% of total luxury car sales in 2024, compared to less than 2% in the mass-market segment.

However, the state government has proposed a 7% motor vehicle tax on construction vehicles, including cranes, compressors, projectors, and excavators, expected to generate ₹180 crore in FY26. Additionally, a 7% tax on light goods vehicles is expected to bring in ₹625 crore in the next fiscal year. Alongside these measures, the government has also announced a 1% hike in the Motor Vehicle Tax on CNG and LPG vehicles.

To boost revenue, the government has increased the maximum limit for Motor Vehicle Tax from ₹20 lakh to ₹30 lakh, which is projected to generate ₹170 crore. Meanwhile, automakers in India are gearing up to launch nearly a dozen new EV models this year, focusing on the premium market with longer driving ranges and faster charging capabilities.

India’s EV market remains small, with electric cars accounting for just 2.5% of the 4.3 million vehicles sold in 2024. However, EV sales grew by 20% year-on-year, outpacing the overall car market growth of 5%. Globally, China dominates the EV market with a 60% share, selling 6.3 million electric cars in 2024, a 27.5% growth from the previous year. In contrast, India recorded 113,530 EV sales, an 18.4% increase, but high prices and limited charging infrastructure continue to hinder mass adoption.