Maharashtra Government Removes 6% Luxury Tax On EVs

Maharashtra chief minister Devendra Fadnavis announced on Wednesday that the state government withdrew its proposed 6 percent tax on luxury EVs priced above Rs 30 lakh. The tax was introduced in the state budget for FY2025-26 by deputy chief minister and finance minister Ajit Pawar, with the aim of raising additional funds. 

Responding to a query from an opposition party member, Fadnavis said that the tax would not generate significant revenue and would undermine the government’s commitment to electric mobility.

Maharashtra EV plans
Tesla Model 3, Model Y, Kia EV6 facelift, Mercedes and BMW EV prices would have increased due to this tax

Another possible reason for scrapping the proposed tax is that the Maharashtra government is said to be currently wooing Tesla to set up a manufacturing plant in the state. As we’ve reported earlier, Elon Musk’s EV brand is likely to introduce its Model 3 and Model Y initially, with on-road prices expected to exceed Rs 40 lakh. A tax on luxury EVs could affect potential Tesla buyers, as well as those considering EVs from companies like BYD, Mercedes, BMW and other premium brands. Even Hyundai and Kia have premium EVs, such as the Ioniq 5 and the recently launched EV6 facelift.

Promotion of electric mobility to combat air pollution in Maharashtra

The chief minister went on to claim that Maharashtra is becoming the national capital of electric vehicles, primarily because significant EV manufacturing plants are coming up in Pune and Chhatrapati Sambhajinagar (formerly Aurangabad). The move to promote EVs and electric mobility across industries aims to address air pollution woes in the state.