Luxury EVs set to become costlier in Maharashtra after state’s tax hike

Premium electric vehicles (EVs) are set to become more expensive in Maharashtra after the state’s government announced its decision to levy 6% as a motor vehicle tax.

This was part of the state budget proposals for the financial year 2025-26 for EVs priced over ₹30 lakh.

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Currently, Maharashtra does not levy any motor vehicle tax on EVs.

The government has also raised the motor vehicle tax by 1 percentage point on individual-owned non-transport four-wheeler CNG and LPG vehicles.

Currently, such vehicles attract a 7-9% tax depending on the type and price.

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The tax increase will increase the state government’s revenue by ₹320 crore in the next fiscal year, according to an Economic Times report.

However, it can also potentially hurt EV sales. For instance, when Telangana took a similar step, EV penetration halved, the report said.

India’s current market leader for luxury EVs is BMW, with 7% of its total sales in 2024 being electric and its most affordable model, the iX1 LWB, costing ₹40 lakh.

“The introduction of a 6% tax on electric vehicles priced above ₹30 lakh in Maharashtra adds a significant cost burden on premium EVs, potentially slowing down the adoption of clean mobility solutions,” the report quoted Vikram Pawah, president of BMW Group India as saying.

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According to the report, electrification in India’s luxury EV segment has also been outpacing the mass car market. In the calendar year 2024, 5% of sales in the luxury segment were EVs, compared to less than 2% in the mass segment.