The GST Council’s ongoing rationalisation exercise could mark a turning point for India’s electric vehicle (EV) market, as per a report by Business Today.
While EVs have so far benefited from a concessional GST rate of 5 per cent, 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 per cent to 18 per cent, while electric buses will continue to be at concessional rate.
The GoM has argued that the current uniform 5 per cent 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 3rd–4th September in New Delhi.
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