High-end EVs to cost more as bill to increase tax tabled in Maha assembly

The new tax rates will be effective from April 1. The state government expects to earn around ₹1,300 crore a year following the amendment

Mumbai: The Maharashtra government on Wednesday tabled a bill in the state assembly to amend the Motor Vehicle Act to tax high-end electric vehicles (EVs) and increase the tax on private vehicles running on CNG or LPG, per its announcement in the state budget earlier this month.

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The new tax rates will be effective from April 1. The state government expects to earn around ₹1,300 crore a year following the amendment.

The amendment provides for a 1% increase in motor vehicle tax for privately owned CNG and LPG vehicles. They currently attract a tax of 7-9% depending on the vehicle type and price. Meanwhile, EVs, which aren’t taxed as per government policy, will now attract a 6% tax if they cost more than ₹30 lakh.

Light motor vehicles carrying goods of up to 7,500 kg will have to pay a one-time tax instead of an annual tax. An official from the state transport department said that the upper limit on motor vehicle tax, ranging between 11% and 20% depending on the type of vehicle, was ₹20 lakh. “High-end vehicles worth more than ₹2 crore were also attracting a maximum tax of ₹20 lakh, which has now been increased to ₹30 lakh,” the official said.

The state government had not increased taxes on new vehicles for more than two decades, the official added. “Electric vehicles had no motor vehicle tax, but it has now been introduced only for high-end EVs. The Act has the provision of a penalty of ₹300-500 for the non-payment of tax, in addition to the recovery of the tax. Once passed by both the Houses, the additional taxation will begin to be implemented from April 1.”

State finance minister Ajit Pawar had announced an increase in the motor vehicle tax in his budget speech on March 10.