Gujarat revises Green Mobility Program: Now pay only 1% RTO on electric vehicles

To accelerate the state's green mobility program and provide substantial financial relief to customers, the Gujarat government has lowered the RTO tax on electric vehicles from 6% to only 1% in a bold step to boost falling EV sales.

The update was included in the Gujarat Budget 2025–2026, which is being praised as a revolutionary step for the economy and environment. Electric vehicle owners are anticipated to benefit between ₹30,000 to ₹1 lakh, depending on the cost of the vehicle, from the 5% tax exemption, which is valid until March 31, 2026.

Earlier, buying an EV for ₹10 lakh required paying ₹60,000 in taxes. However, buyers would now save a flat ₹50,000 by merely paying ₹10,000. The timing of this tax cut is crucial because EV sales have already fallen by over 50% after state subsidies were stopped a year ago.

The new rule ensures transparency and streamlines the registration procedure by limiting the tax reduction to those who register their automobiles online via the Vahan 4.0 site.

Although EV adoption was aided by the previous subsidy of ₹25,000 for two-wheelers and ₹1.5 lakh for four-wheelers under ₹15 lakh, sales plummeted after that support was removed. It is anticipated that the new tax system will reverse that trend.

According to industry analysts, this financial incentive will support sustainable transportation and revive customer enthusiasm, both of which are in line with India's larger objective of lowering carbon emissions.