The GST Council’s ongoing rate rationalisation exercise could significantly impact India’s electric vehicle (EV) market, according to a report by Business Today.
Until now, EVs have benefited from a concessional GST rate of 5%, but the Group of Ministers (GoM) on rate rationalisation has proposed a substantial hike for premium four-wheelers.
Under the proposal, four-wheeled 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 to enjoy the concessional rate.
The GoM noted that the current uniform 5% rate disproportionately benefits high-end buyers, arguing that taxation should differentiate between affordable EVs for mass adoption and luxury EVs positioned as premium products. Officials also highlighted that maintaining low GST on expensive EVs could lead to revenue losses and create inequities in the tax system.
If approved by the Council, the move could raise prices of luxury EVs in India, potentially affecting demand among affluent buyers. The final decision is expected when the GST Council meets on 3rd–4th September in New Delhi.
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