New fiscal measures include 1% tax on CNG vehicles as state targets revenue generation while maintaining support for affordable electric mobility.
March 11, 2025
New tax targets luxury segment only
The Maharashtra government has announced a 6% tax on premium electric vehicles costing over ₹30 lakh. The measure, revealed during Monday’s state budget presentation, will take effect from April 1, 2025.
Chief Minister Devendra Fadnavis clarified the selective approach of the new policy. “The tax is levied only on EVs which are priced above ₹30 lakh because it’s luxury and not below that,” he stated.
This targeted taxation suggests the state aims to maintain incentives for mass-market electric vehicles while generating revenue from luxury segments.
CNG vehicles also face tax increase
Along with the EV taxation, the budget introduced a 1% tax on Compressed Natural Gas (CNG) vehicles. This measure is expected to generate about ₹150 crore in additional revenue for the state treasury in the 2025-26 fiscal year.
The dual approach indicates Maharashtra’s shifting priorities in the alternative fuel vehicle sector.
Industry concerns about timing
Market experts have expressed concerns about the potential impact on electric vehicle adoption. The current EV penetration in passenger vehicles remains at approximately 2% in the state.
“With the tax, the prices of electric vehicles will go up,” noted Manish Raj Singhania, Chairman of Research & Academy at the Federation of Automobile Dealers Associations (FADA). “The period of subsidy for electric vehicles is getting over. This is the perfect time to continue the subsidy as automobile players are bringing new electric vehicle products.”
Balancing act for the market
Industry observers point to a potential silver lining. Battery prices are expected to decrease in the coming months, which could offset some of the price increases resulting from the new taxation.
“The balance between both should happen,” Singhania added, suggesting that falling component costs might cushion the impact of the new tax structure.
Strategic implementation timeline
The April 1 implementation date gives manufacturers and dealers several weeks to adjust pricing strategies and clear existing inventory under the current tax structure.
For consumers considering premium electric vehicles, this creates a clear deadline to make purchases before prices increase.
The Maharashtra government’s approach differs from other states that have maintained blanket incentives for all electric vehicles regardless of price point. This more nuanced strategy attempts to balance revenue needs with continued support for affordable electric mobility.
