EVs to continue at 5% GST rate as Council opts for clean mobility push

The Goods and Services Tax (GST) Council has decided to retain the concessional 5% GST rate on electric vehicles (EVs), a major relief for India’s clean mobility push amid the sweeping tax overhaul under “GST 2.0.”

Under the new two-slab structure — 5% for essentials and 18% as the standard rate, along with a 40% bracket for sin and luxury items — there had been speculation that premium EVs could be shifted to higher slabs. However, the Council clarified that all categories of EVs, whether mass-market or luxury, will continue under the 5% rate with no additional cess.

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This means domestic launches like Tata’s Harrier EV and Mahindra’s XEV 9e will avoid steep price hikes, while imported models from Tesla, Mercedes-Benz, BMW, and BYD will also stay within the same concessional bracket.

Between April and July this year, EV sales touched 15,500 units, with Tata Motors leading the market at 40% share, followed by Mahindra at 18%. Tesla has also entered with its Model Y, though deliveries are yet to begin.

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By maintaining the concessional slab, the Council has effectively signalled that clean mobility remains a priority even as broader GST reforms aim to simplify India’s tax structure.