GST new rates: High-end electric vehicles likely to attract 18% GST

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 in its draft report submitted to the 56th GST Council.

According to the proposals, GST on four-wheeled EVs priced between ₹20 lakh and ₹40 lakh will be raised from 5% to 18%, while electric buses will continue to be at 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. 

These are proposals from the Group of Ministers, not the Centre, and will be taken up at the Council meeting for further deliberation.

As per sources, the Council will take up the matter for discussion on recommendation by states. 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.