EV buyers get relief: Tamil Nadu extends full-road tax exemption for EVs by two years

In a move to further promote electric mobility in the state, the Tamil Nadu government has decided to extend its 100% motor vehicle tax exemption policy for another two years. After the update, people in the state will be able to buy all battery-operated vehicles without a motor vehicle tax by Dec. 31, 2027, a government notification reported. 

As per the notification released by Industries Minister TRB Rajaa, both transport and non-transport EVs will be able to enjoy th benefits of this extension. The extension was legislated under the scope of the Tamil Nadu Motor Vehicles Taxation Act, 1974. The updated exemption window, which will span from January 1, 2026, to December 31, 2027, will give buyers ongoing assistance while giving state-based manufacturers and investors regulatory certainty.

Motor vehicle tax is usually charged either as a one-time fee at registration or periodically at renewal, depending on the type of vehicle. By continuing the full tax exemption, the Tamil Nadu government is reducing the overall on-road cost of electric vehicles, including electric two-wheelers, passenger cars, and commercial vehicles.

This results in significant upfront savings for customers. Motor vehicle tax can increase the cost of the purchase by tens of thousands of rupees, depending on the car's price and classification. One of the main obstacles to broader EV adoption is the cost difference between electric vehicles and traditional gasoline or diesel equivalents, which can be reduced by removing this burden.

As per Rajaa, the update is in line with the state government’s aim of large-scale production, affordability, and EV adoption. Chief Minister MK Stalin approved the extension, which is meant to provide a clear and consistent policy signal at a time when investments in sustainable mobility around the world are confronted with geopolitical and economic instability.

With battery-powered vehicles making up 7.8% of all vehicle adoption in 2025, Tamil Nadu has seen a steady increase in EV penetration. The government has recognised that sustained growth would necessitate concurrent advancements in charging infrastructure, supply-chain localisation, and greener manufacturing methods, even though this reflects increased customer acceptability.

The ongoing tax exemption gives EV producers demand-side certainty, which is crucial when deciding on localisation, product debuts, and capacity expansion. Reduced ownership costs can support the state's vendor ecosystems and production volumes by sustaining consumer interest.