Maharashtra government has introduced major changes to motor vehicle tax, which is likely to affect car owners, electric vehicles, and commercial vehicles.
From April 1, 2025, electric vehicles (EVs) that cost more than Rs 30 lakh in Maharashtra will be subject to a new 6 percent tax, as outlined in the state’s 2025-26 budget announcement. This new tax on luxury EVs marks a departure from the state’s previous stance of encouraging EV adoption through incentives.
This move is expected to bring in ₹170 crore in additional annual revenue.
Finance Minister Ajit Pawar stated, “It is true that in this budget, we imposed and increased the taxes on vehicle purchases, but we have ensured that these taxes are not for the poor people. The people who buy high-end vehicles and can afford the taxes are the ones who need to pay.”
While the rationale behind the tax is revenue generation, it may also impact the demand for premium EVs.
The electric vehicle penetration in the passenger car segment in India is upto 2.5 per cent. Experts have stated while the electric vehicle prices will increase, the battery prices are set to reduce with the exemption of duties announced in the budget.
The mass-market category like Tata, Mahindra, MG and Hyundai, and a few BYDs will Remain Unaffected bybthe move. While, Premium EV makers like Mercedes-Benz, BMW, BYD and even the upcoming Tesla could feel the heat from this move. With Tesla entering the Indian market, the new 6% tax on luxury electric vehicles could be a blow to the Elon Musk-led company.
This targeted taxation suggests the state aims to maintain incentives for mass-market electric vehicles while generating revenue from luxury segments.
Moreover, 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.
This tax adjustment applies solely to non-commercial vehicles, excluding public transport options such as auto-rickshaws, taxis, and buses. The move is expected to impact buyers looking for more economical and eco-friendly fuel alternatives.
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