Subsidies & Tax Benefits for Electric Vehicle Owners in India

The Indian electric vehicle (EV) market is experiencing remarkable growth, thanks largely to proactive government policies offering financial support to buyers and manufacturers. From national-level incentives to state-specific perks and tax reliefs, EV ownership is now more accessible and economically viable than ever before.

National Incentives Under the FAME II Scheme

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) India Scheme—currently in its second phase—is a key driver of EV adoption. Under FAME II, buyers of electric two-wheelers, three-wheelers, and public transport vehicles receive subsidies based on battery capacity (₹10,000 per kWh). This significantly reduces the upfront cost, making EVs more affordable. The scheme also supports charging infrastructure and R&D in the EV space.

State-Level Subsidies and Exemptions

Several Indian states offer additional financial incentives to complement the central subsidies. For instance, Maharashtra, Delhi, Gujarat, and Tamil Nadu provide state-funded discounts, exemptions on road tax, and registration fee waivers. Some states even offer incentives for scrapping old vehicles and replacing them with EVs. These benefits vary but can collectively lower the EV ownership cost by ₹20,000–₹1.5 lakh or more depending on the vehicle type.

Tax Benefits for EV Buyers

The Indian government offers attractive tax benefits for individual EV buyers. Under Section 80EEB of the Income Tax Act, individuals can claim a deduction of up to ₹1.5 lakh on interest paid on loans taken for EV purchases. Additionally, the GST on EVs has been reduced from 12% to just 5%, compared to 28% for petrol and diesel vehicles. These benefits offer long-term financial relief and promote sustainable choices.

Conclusion

With a combination of central subsidies, state-level support, and tax incentives, India is paving the way for an electric mobility revolution. For buyers, this is not just an opportunity to save money but also to contribute to a cleaner, greener future. As the ecosystem matures and policies continue to evolve, electric vehicles are set to become the preferred choice for environmentally conscious and cost-savvy Indians.