Maharashtra Government Withdraws EV Tax on Luxury Cars
In a significant development, the Maharashtra government has announced that it will withdraw its proposal to impose a 6% tax on electric vehicles (EVs) priced above Rs 30 lakh. This decision, confirmed by Chief Minister Devendra Fadnavis, comes as the state aims to support the growing demand for luxury electric cars.
Luxury EV Market Growth in India
The luxury EV segment in India has shown impressive growth, surpassing the mass car market. In 2024, it accounted for 5% of all luxury cars sold in India, a significant increase from less than 2% in previous years. Currently, EVs in Maharashtra enjoy tax exemptions, which had been a strong incentive for consumers considering electric alternatives.
Government’s Tax Proposals and Adjustments
The budget proposal that triggered the controversy also included a motor vehicle tax hike for other vehicle types. It suggested a 1% increase in taxes for non-transport CNG and LPG vehicles. Furthermore, a 7% tax was proposed for construction vehicles, including cranes and excavators, expected to generate an estimated Rs 180 crore in revenue in the upcoming fiscal year. Light goods vehicles would also face a 7% tax, projected to yield Rs 625 crore.
The government also raised the upper limit of the Motor Vehicles Tax from Rs 20 lakh to Rs 30 lakh, a move expected to generate additional revenue of Rs 170 crore for the state.
“Electrification in the luxury EV segment has been outpacing the mass car market in India. It accounted for 5% of luxury cars sold in calendar 2024 compared to less than 2% in the mass segment.”
While the state’s decision to withdraw the EV tax will be welcomed by electric vehicle manufacturers and potential buyers, it reflects the growing importance of the electric vehicle sector in Maharashtra’s future mobility plans. As the global EV market continues to evolve, India is expected to increase its focus on electric vehicles, despite some challenges like high prices and limited charging infrastructure.
As the demand for EVs rises, automakers are planning to introduce new models with longer ranges and faster charging capabilities, targeting both the premium and mass-market segments. While India’s EV market is still small compared to global leaders like China, the government has set an ambitious target to increase the share of EVs to 30% of all vehicle sales by 2030.
