Maharashtra drops proposed 6% EV tax to boost adoption

Earlier this month, the Maharashtra government proposed to levy taxes on electric, LPG, CNG and commercial vehicles, with an aim to boost state’s revenue. However, in a surprising turn of events, the government has reconsidered its plans and decided not to proceed with the EV tax. Read on to know the reason behind this welcoming move and how the state plans to proceed forward in this regard.

Proposed EV tax in Maharashtra revoked

In our previous story, we shared that the Maharashtra government has proposed a 6% tax on EVs costing above Rs 30 lakh, which will help in boosting the state’s revenue. However, this move was criticised by members of the council, citing concerns over slow adoption of EVs and rising air pollution, as this move could discourage EV buyers. As a result, the state government revoked its proposal for EV tax.

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As per a report by The Hindu, Mr. Parab argued that the proposed tax would contradict the Centre’s efforts to promote clean mobility. “Levying a 6% tax on high-end EVs would be counterproductive,” he said. In response, Maharashtra Chief Minister Devendra Fadnavis acknowledged the concern and said the government had reconsidered its stance. “The tax would not generate significant revenue and could send the wrong signal about our commitment to electric mobility. Therefore, we will not proceed with it,” he stated.

Proposed tax on CNG/LPG and commercial vehicles could continue

However, the state government has not clarified its stance on the proposed tax on CNG/LPG and commercial vehicles. In addition to the electric vehicles, the Maharashtra Government also introduced tax revision to the CNG and LPG-powered vehicles. The government has proposed to increase the motor vehicle tax on CNG and LPG-powered vehicles by 1%. This move will increase the acquisition cost of these vehicles, which are otherwise popular for their low-running costs and fuel efficiency. As per the report, this imposition of tax could generate revenue north of Rs 150 crore to the state. How will this new tax imposition change the demand and overall sales is something that remains to be seen.

The construction and logistics sectors could also bear the impact of increased taxation. A 7% lump sum tax has been proposed on construction vehicles such as cranes and excavators, expected to generate ₹180 crore in revenue. Likewise, light goods vehicles (LGVs) with a capacity of up to 7,500 kg could be subject to the same 7% tax, contributing an estimated Rs 625 crore to the state's funds. Additionally, the budget raises the motor vehicle tax ceiling from ₹20 lakh to ₹30 lakh, affecting high-value vehicle purchases and bringing in approximately Rs 170 crore in revenue.

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