CNG Tax Hike In Maharashtra Won't Make Much Difference: FADA Secretary
Amar Sheth of the Federation of Automobile Dealers Associations doesn't think the auto industry or vehicle owners should bear the brunt of these taxes.
The motor vehicle tax in Maharashtra on compressed-natural-gas cars will not make much difference, while electric vehicles may see a slight pullback, according to Amar Jatin Sheth, secretary of the Federation of Automobile Dealers Associations.
The Maharashtra government proposed on Monday to increase the motor vehicle tax on CNG and electric cars with effect from April 1. CNG cars will now attract 1% more road tax across slabs. Electric cars priced above Rs 30 lakh will be taxed at 6%. The state accounts for 15% of India's electric car sales, with 15,044 EVs sold in 2024 and over 2 lakh CNG cars sold in the current financial year.
"The definition of luxury is changing. Especially with entry-level cars having high-end luxury features, I feel Rs 30 lakh is a decent amount of money," Sheth told NDTV Profit. "In segmentation analysis, even Rs 25 lakh and above is considered luxury."
Sheth underlined that the automotive industry had been facing challenges over the past few months. "However, in my opinion, this 1% hike on CNG vehicles will not make much difference."
People buying CNG cars for economic reasons will continue to do so and will not switch to petrol or diesel vehicles.Amar Jatin Sheth
Sheth emphasised that the 6% tax applies to the luxury segment of EVs, ensuring early adopters remain incentivised. However, he added, it would make some people rethink their decision.
"Traditionally, the auto industry has faced heavy taxation. However, I believe India is progressing rapidly toward becoming a developed economy," he said. "Therefore, I do not think the auto industry or vehicle owners should bear the brunt of these taxes. There are many other avenues for taxation."
Regarding EV adoption, Sheth highlighted that it was still in the early stages. "Yes, demand is rising. However, there was a dip when subsidies were withdrawn, but growth has resumed," he explained.
Two-wheeler scooters have seen significant EV adoption. In the commercial segment, three-wheelers now have almost 60% EV adoption. Those recognising the commercial benefits of EVs are certainly making the switch, according to Sheth.
He highlighted that as EV infrastructure, especially charging facilities, improves, there will be "even more growth" in this sector.
