Maharashtra Chief Minister Devendra Fadnavis announced on 26th March, 2025 that the state government has withdrawn its proposed 6% tax on luxury electric vehicles (EVs) priced above Rs. 3 million (US$ 36,025).

The tax was introduced in the state budget for FY2025-26 by Deputy Chief Minister and Finance Minister Ajit Pawar, with the objective of generating additional revenue.

In response to a query from an opposition party member, Fadnavis stated that the tax would not generate significant revenue and would undermine the government's commitment to promoting electric mobility.

Maharashtra's EV strategy

Another likely reason for scrapping the proposed tax is Maharashtra's ongoing efforts to attract Tesla to establish a manufacturing facility in the state.

Reports indicate that Tesla is expected to introduce the Model 3 and Model Y in India, with on-road prices anticipated to exceed Rs. 4 million.

A tax on luxury EVs could potentially deter Tesla buyers, as well as those considering electric vehicles from manufacturers such as BYD, Mercedes-Benz, BMW, and other premium brands.

Even Hyundai and Kia offer high-end EVs, including the Ioniq 5 and the recently launched EV6 facelift, which could have been affected by the tax.

Promotion of electric mobility to address air pollution

The Chief Minister further stated that Maharashtra is emerging as the leading hub for electric vehicles in India, largely due to the establishment of significant EV manufacturing facilities in Pune and Chhatrapati Sambhajinagar (formerly Aurangabad).

The government's push for electric mobility across various industries is intended to combat air pollution in the state.