The electric vehicle sector in India is on a growth trajectory, however, a proposal to increase the Goods and Services Tax (GST) on premium EVs is causing apprehension within the industry. A ministerial group has recommended raising the GST on electric cars priced above ₹20 lakh from 5% to 18%. While the GST Council is yet to make a final decision, discussions alone are impacting business sentiment and consumer behavior.
Industry leaders are weighing in on the issue. According to Shailesh Chandra, MD of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, EVs have achieved remarkable progress in India, with the on-road costs of EVs and ICE vehicles in many SUV segments nearing parity.
Furthermore, the expanding public charging network, which has over 24,000 stations, and the availability of EVs with a real range of up to 500 kilometers are important factors. The current 5% GST rate has contributed to consumer trust. An increase in the tax rate could slow the rate of EV adoption.
Mahindra & Mahindra noted that the 5% rate helps to create price balance in the market. MG Motor India’s MD, Anurag Mehrotra, said it helps to promote EVs and called for zero GST along with easier charging infrastructure and home charging solutions.
According to Santosh Iyer, MD and CEO of Mercedes-Benz India, entry-level luxury EVs could be significantly affected. He highlighted that while the high-end customers may be less price-sensitive, the lower tax rate has supported the sales volumes. In July 2025, India saw a 93% increase in electric car sales compared to the previous year, totaling 15,528 units.