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India Eyes Major GST Hike On Premium EVs: Harrier EV, BE6 & XEV 9e, Luxury EVs to Get More Expensive?
An Indian tax panel has recommended a significant increase in GST for electric cars to the government claims a new report by Reuters. The proposal seeks to raise the rate from 5 per cent to 18 per cent on vehicles priced between ₹20 lakh and ₹40 lakh, while EVs costing above ₹40 lakh may attract 28-40 per cent taxation.
The ₹20-30 lakh EV segment is at the centre of this change. Tata's Harrier EV, launched at ₹21.49 lakh, along with Mahindra's BE 6 and XEV 9e, priced between ₹18.9 lakh and ₹30.5 lakh, all fall directly within the proposed higher slab.
These mid-sized electric SUVs currently bridge affordability and aspiration. An 18 per cent GST would raise their prices substantially, possibly shifting them out of reach for many buyers.
EVs priced above ₹40 lakh also face sharper increases.
These EVs, according to the Reuters report, could face GST of 28%. However, with the government looking to abolish the 28% GST slab, these EVs may get shoved into the sin tax slab of 40%, which will mean a 35% increase in prices compared to current rates.
The recently launched Tesla's Model Y, priced between ₹59.89 lakh and ₹67.89 lakh, is surely set to get more expensive, as are all EVs from the German luxury trio of Audi, BMW and Mercedes. Also affected will be Hyundai's Ioniq EVs and Kia's EV series.
The new system would create three distinct tiers: 5 per cent for EVs under ₹20 lakh, 18 per cent for those between ₹20 and ₹40 lakh, and 28-40 per cent for premium models. This tiering marks a clear shift from the earlier uniform 5 per cent rate.
Many automakers have expressed concern with Tata Motors telling Reuters that it was "imperative" the current tax rate is retained as any hikes would slow "the transition to clean mobility. BMW also told the news agency that the increase "can derail the vision of high electric adoption and local production."
Consumer behaviour is already showing signs of caution. Prospective buyers are said to be delaying or cancelling bookings. Many are waiting for clarity after the GST Council's meeting that starts tomorrow, before making purchase decisions.
Investor reaction has mirrored these concerns. Shares of Tata Motors slipped by around one per cent today, while Mahindra dropped more than two per cent, and Hyundai also saw modest losses following news of the proposed changes.
If adopted, the higher GST rates could reshape India's EV market. Affordable models under ₹20 lakh may continue growing, but vehicles priced between ₹20 and ₹40 lakh face an uncertain future, while premium EVs above ₹40 lakh risk becoming even more exclusive, and those lower numbers could lower investment into the Indian market.
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