The GST Council’s ongoing rationalisation exercise could mark a turning point for India’s Electric Vehicle (EV) market. While EVs have so far benefited from a concessional GST rate of 5%, the Group of Ministers (GoM) on rate rationalisation has recommended a steep hike for premium four-wheelers.
According to the proposals, GST on four-wheeled EVs priced between Rs 20 lakh and Rs 40 lakh will be raised from 5% to 18%, while EVs costing more than Rs 40 lakh will face a jump from 5% to 28%. Only electric buses will continue to enjoy the existing 5% concessional rate.
The GoM has argued that the current uniform 5% rate disproportionately benefits high-end buyers, and that taxation should distinguish between affordable EVs aimed at mass adoption and luxury EVs positioned as premium products. Officials noted that maintaining a concessional rate for expensive vehicles risks revenue loss and creates inequity in the system.
If accepted by the Council, the move could significantly alter the pricing of luxury EVs in India, potentially impacting demand from affluent buyers. The final decision rests with the GST Council, which will meet on September 3–4 in New Delhi.
