India Mulls Hefty Tax Hike on Luxury EVs as Part of Broader GST Overhaul

India may soon make luxury electric vehicles (EVs) more expensive. A government panel has proposed a sharp jump in GST for premium EVs, which are currently taxed at just 5%. Under the plan, EVs priced between ₹20–40 lakh could see GST rise to 18%, while those costing above ₹40 lakh may attract 28% or even a new 40% “luxury” category.

The proposal is part of a wider GST overhaul aimed at simplifying rates and supporting the domestic industry. Everyday items like groceries and electronics could see lower taxes, but high-end imports, including luxury EVs, are being singled out for higher levies to balance the system.

Not everyone is on board. Automakers like Tata Motors and Mahindra & Mahindra, who dominate the affordable EV market, have raised concerns that higher taxes on premium models could slow India’s shift to clean mobility. Industry experts warn that just as premium EVs are starting to gain traction, this move could dampen demand.

The markets didn’t take the news lightly. The Nifty Auto index slipped by nearly 0.5%, with Tata Motors stock down 1% and Mahindra & Mahindra losing over 2%, showing clear investor anxiety about the policy’s impact on the EV sector.