GST on Electric Vehicles: Current Rates & Expected Changes

Current GST Rates on EVs and Charging Infrastructure

The Government of India currently offers a significantly lower Goods and Services Tax (GST) rate of 5% on electric vehicles, including electric two-wheelers, three-wheelers, and four-wheelers. This reduced rate applies to both personal and commercial EVs, making them more affordable compared to internal combustion engine (ICE) vehicles, which attract GST rates up to 28%. Additionally, EV charging equipment and charging stations are also taxed at 5%, down from the earlier 18%, further incentivizing investment in EV infrastructure.

GST on Used EVs and Battery Components

For resale of electric vehicles through registered dealers, the GST Council recently revised the rate to 18% on the profit margin, aligning it with conventional vehicle resales. However, private individual-to-individual resale remains exempt from GST. A key concern raised by industry stakeholders is the differential GST on EV batteries—while batteries sold as part of a vehicle attract 5%, separately sold batteries still carry 18% GST, creating a policy inconsistency that may impact the battery replacement and swapping market.

Anticipated Changes and GST Council Reforms (2025)

In upcoming GST Council discussions, several changes are under review. The Council is expected to reduce GST on standalone EV batteries from 18% to 5%, aligning them with vehicle-integrated units. This would benefit companies offering battery-swapping models and encourage greater adoption of battery-as-a-service (BaaS) models. Additionally, broader GST compliance reforms—such as multi-factor authentication for GST portals and improved e-invoicing rules—are likely to take effect from April 2025, impacting EV manufacturers, dealerships, and service providers alike.

Conclusion

GST reforms have been a key driver in promoting EV adoption in India by making electric vehicles and related infrastructure more affordable. While the current 5% GST rate has helped lower upfront costs, upcoming adjustments—especially on standalone battery taxation—could further strengthen the EV ecosystem. As India moves toward its clean mobility goals, a rationalized and consistent GST framework will play a crucial role in supporting manufacturers, investors, and consumers alike.