The GST Council’s ongoing rate rationalisation exercise may reshape India’s electric vehicle (EV) market.
Currently, EVs attract a concessional GST rate of 5%, but the Group of Ministers (GoM) on rate rationalisation has proposed a significant hike for high-end four-wheelers. Under the proposal, EVs priced between ₹20 lakh and ₹40 lakh would see GST increase from 5% to 18%, while electric buses and other mass-market EVs would continue at the lower rate.
The GoM stated that the current uniform rate favors luxury buyers disproportionately, and that the tax structure should distinguish between affordable EVs aimed at mass adoption and premium vehicles. Officials also noted that keeping concessional GST for expensive EVs could lead to revenue losses and systemic inequities.
If the Council approves the proposal, the pricing of luxury EVs in India could rise, potentially dampening demand among affluent consumers. The final decision will be taken when the GST Council meets on 3rd–4th September in New Delhi.
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