EVs Now More Affordable In Gujarat, Government Slashes Road Tax By 5 Percent

This benefit will be applicable on all electric vehicles till March 31, 2026 

The Gujarat government has initiated a tax slash for all electric vehicles by 5 percent. This move was proposed during the state budget (2025-2026) and came into force on April 18, 2025. New owners of an EV will now have to pay only 1 percent road tax from the earlier 6 percent, making electric vehicles more affordable. This benefit is, however, not permanent and is only applicable till March 31, 2026. In this report we cover the possible reason for this new scheme along with how much a new owner of an EV can save. 

Why The Relief ?

The Finance Minister of Gujarat, Shri Kanubhai Desai, stated the reason for this tax relief as a way to promote the sales of EVs and to protect the environment. 

The sales figures of all electric vehicles have seen a steep decline in Gujarat, with sales going from 88,614 units (2023) to 50,010 units (2024) within a year, which is a steep decline of 43 percent. One of the reasons for this decline can be attributed to the removal of subsidies that the EV vehicles attracted, which provided a rebate of Rs 1.5 lakh for the 4-wheelers with a price tag of less than Rs 15 lakh.

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How Does It Translate To Savings?

Under this scheme a customer will be required to pay only 1 percent road tax on a newly purchased EV. Earlier, 4-wheeler EVs attracted a road tax of 6 percent. 

While this rebate is applicable to all electric vehicles regardless of price, when directly compared, a customer will get fewer benefits than they did with the earlier subsidies if they were to purchase a vehicle that costs less than Rs 15 lakh.

For example, the mid-exclusive variant of the MG Windsor, which costs Rs 15 lakh (ex-showroom), would have attracted a total benefit of Rs 1.5 lakh with the earlier subsidy. Now with the tax rebate, it attracts a benefit of Rs 45,000. Owners buying EVs that cost more than Rs 15 lakh, however, can now enjoy benefits that were earlier not available to them. 

No matter the scale of the benefit, this move is expected to increase the sales of EVs in Gujarat. 

Requirements 

To avail the new tax benefit, customers will need to register their new electric vehicles online through the Vahan 4.0 portal. Registering online will not only provide the aforementioned tax benefit but also provide a straightforward way of registration instead of physically visiting an RTO. 

Also note that this new scheme is only applicable to all pure electric vehicles. Cars with mild and strong hybrid tech will not attract this benefit. 

Do you think this tax slash is enough, or should the government introduce more benefits to make the EVs a more lucrative choice over their ICE counterparts? Let us know in the comments. 

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