Cost of Owning Cleaner Vehicles In Maharashtra To Rise From April 1

Owning a cleaner, more eco-friendly vehicle in Maharashtra is set to get costlier starting April 1, as the state government on Monday proposed a hike in road tax on both electric and compressed natural gas vehicles. The move, part of Maharashtra’s 2024-25 budget, is expected to generate an additional Rs 170 crore in revenue in the upcoming financial year.

However, it comes at a time when electric and auto sales are already under pressure due to weak demand, raising concerns about the potential impact on green mobility.

Auto industry expert Hormazd Sorabjee, editor of Autocar India, told NDTV Profit that while the new tax structure is aimed at luxury vehicle owners, it risks sending the wrong message when electric and CNG vehicles—considered cleaner alternatives—are taxed more heavily. 

“Clearly what they’re doing is they’re targeting the luxury end of the market. The mass EV segment is so far untouched,” Sorabjee said, adding that “pollution doesn’t depend on the price of the car; it depends on what comes out of your tailpipe. EVs have no tailpipe emissions, and across the board, they should be encouraged; they should have as little taxation as possible.”

According to the proposal, electric vehicles priced above Rs 30 lakh will now attract a 6% road tax, while all privately owned CNG and liquefied petroleum gas vehicles will see a 1% increase in tax across slabs. The upper limit of motor vehicle tax, earlier capped at Rs 20 lakh, has also been raised to Rs 30 lakh.

While the state’s move clearly focuses on high-end EVs, Sorabjee pointed out that it contradicts Maharashtra’s own EV Policy 2021, which promised zero road and registration tax for all EVs to encourage adoption. Maharashtra accounts for about 15% of total electric car sales in India and saw 15,044 EVs sold so far in 2024. “It may have been too early to have come in with this,” Sorabjee said, noting that EV adoption is still challenged by issues like limited charging infrastructure.

CNG vehicles, which recently surpassed diesel in sales in Maharashtra, will also face higher taxation. Over 2 lakh CNG vehicles have been sold in the state in FY25 so far.

Sorabjee acknowledged the government’s attempt to tap into the segment’s rapid growth. “We’ve seen a huge growth in CNG over here. For the first time, CNG has actually overtaken diesel, which is, in a way, great from an environmental point of view,” he said. “From the government’s point of view, they feel that, hey, there’s a lot of growth over here and obviously, they want to take the extra benefit of that.”

However, he warned that taxing cleaner options while leaving petrol and diesel vehicles untouched “is not in the right direction because clearly you are taxing vehicles which are cleaner in terms of their emissions.”

Sorabjee also noted that private car owners have long been the “low-hanging fruit” for governments looking to raise revenue. “To raise revenue, obviously the car or the motorist has always been at the receiving end. We face some of the highest road taxes ever—going up to 43-48%, maybe even 50% when GST and other charges are included,” he pointed out.

While he admitted that the hikes—1% for CNG and 6% for luxury EVs—may not significantly dent sales, he argued that they reflect a troubling trend. “These tax hikes are not really seismic enough to move the needle, but the principle of taxing cleaner vehicles hasn’t really come at the right time, especially when the auto industry is looking at a difficult 2025, with potentially no growth or even negative growth,” Sorabjee said.