EV tax exemption extended to accelerate adoption
The Tamil Nadu government has extended the 100% motor vehicle tax exemption for all battery-operated electric vehicles until December 31, 2027, reinforcing its support for electric mobility and sustainable transportation. The decision, announced by Industries Minister T.R.B. Rajaa, follows a government order under the Tamil Nadu Motor Vehicles Taxation Act, 1974 and is effective from January 1, 2026 through the end of 2027.
This extension applies to both transport and non-transport EVs, including two-wheelers, private cars, three-seat auto-rickshaws and other battery-operated vehicles registered in the state. The move builds on earlier waivers that were set to expire at the end of 2025.
Policy rationale and EV penetration
Tamil Nadu Industries Minister TRB Rajaa said the extension reinforces the state government’s commitment to EV adoption, affordability, and manufacturing at scale, aligning with its broader sustainability focus. The minister highlighted that EV penetration in the state had reached about 7.8% in 2025, indicating rising interest in electric mobility while also acknowledging ongoing challenges in charging infrastructure expansion and greener supply chain development.
The exemption offers consumers lower upfront costs when purchasing EVs and gives manufacturers long-term certainty for investment and scaling operations in the state. Industry stakeholders and OEMs had advocated for the continuation of fiscal incentives to sustain and accelerate EV demand, especially given the absence of a corresponding extension of central EV purchase incentives.
Implications for the EV ecosystem
By extending the tax waiver for two more years, Tamil Nadu strengthens its position as a pro-EV policy state, enhancing attractiveness for EV manufacturers and fostering a supportive environment for e-mobility infrastructure development. The policy ensures continued incentive alignment as the state navigates the transition toward electrified transportation and scalable EV markets.
