Gujarat Slashes Road Tax On EVs To 1%; In Effect Till March 2026

The Gujarat government has announced a five per cent tax rebate on the purchase of electric vehicles in the state. As a result, EV buyers will only have to pay RTO tax of one per cent on their vehicles. Initially proposed in the state’s 2025 budget announcement, this law has now been approved, and will be in effect till March 2026. The government has stated that the tax benefits can be availed by registering the vehicles online on the Vahan 4.0 portal.

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Stating the obvious, this aims to boost the adoption of EVs in the state, the sales of which have taken a downturn in recent years. According to officials, customers can save between Rs 5,000 to Rs 10,000 on an all-electric two-wheeler. However, the chunk of savings will go to buyers of four-wheeler EVs. For instance, buyers of a top-spec Tata Nexon EV (priced at Rs 17.19 lakh) would have been liable to pay over Rs 1 lakh, according to the older norms. With the new rule, the same buyers would only need to pay approximately Rs 17,000.

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EV sales fell by 43.5 per cent in 2024 in the state, with the sale of 50,010 units. For reference, the number of EVs sold in Gujarat in 2023 amounted to 88,614 EVs. Part of the reason for this slump was the government’s discontinuation of EV subsidies (Rs 25,000 for two-wheelers, Rs 1.5 lakh for four-wheelers). Furthermore, the state has revised the tax rates on all vehicles classified under the Maxi category to six per cent.