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August 25, 2026
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BySteffy A
GST Rate on Electric Vehicles and Electric Cars in India
Introduction
The GST Rate on Electric Vehicles in India is currently 5%, making electric cars, electric scooters, electric buses, and other electrically operated vehicles more cost-effective for consumers and businesses.
Electric mobility is rapidly gaining momentum in India due to rising fuel prices, increasing environmental awareness, and strong government support. One of the key factors driving this transition is the lower GST Rate on Electric Vehicles, which makes electric vehicles more affordable compared to conventional petrol and diesel vehicles.
This article explains the latest GST Rate on Electric Vehicles, applicable notifications, HSN codes, Input Tax Credit (ITC) provisions, and the key differences between electric vehicles and conventional vehicles under GST.
What Is the GST Rate on Electric Vehicles in India?
The GST Rate on Electric Vehicles in India is 5%.
The concessional GST Rate on Electric Vehicles applies to:
- Electric cars
- Electric scooters
- Electric motorcycles
- Electric buses
- Electric three-wheelers
- E-rickshaws
- E-bicycles
Further, no compensation cess is applicable on electric vehicles. The current GST Rate on Electric Vehicles has remained unchanged since 1 August 2019. To understand the broader taxation framework applicable to different vehicle categories, you can also read about GST on cars in India.
What Are Electric Vehicles Under GST?
For the purpose of determining the applicable GST Rate on Electric Vehicles, an electrically operated vehicle means a vehicle that runs solely on electrical energy derived from an external source or from one or more electrical batteries fitted to the vehicle.
This definition includes e-bicycles.
The concessional GST Rate on Electric Vehicles applies only to purely electric vehicles. Hybrid vehicles that use both fuel and electricity do not qualify for the reduced GST Rate on it.
Notification Governing the GST Rate on Electric Vehicles
The reduced GST Rate on Electric Vehicles is governed by Notification No. 12/2019-Central Tax (Rate).
The key details are as follows:
|
Particulars |
Details |
|
Notification |
Notification No. 12/2019-Central Tax (Rate) |
| Date of issue |
31 July 2019 |
|
Effective date |
1 August 2019 |
| Previous GST rate |
12% |
|
Revised GST rate |
5% |
The reduction in the GST Rate on Electric Vehicles was implemented through Notification No. 12/2019-Central Tax (Rate), following the recommendations of the 36th GST Council meeting. to encourage the adoption of clean mobility solutions.
Latest GST Rate on Electric Vehicles in India
The following table shows the latest GST Rate on Electric Vehicles applicable in India.
|
Type of Vehicle |
GST Rate |
Compensation Cess |
|
Electric cars |
5% | Nil |
| Electric scooters | 5% |
Nil |
|
Electric motorcycles |
5% | Nil |
| Electric buses | 5% |
Nil |
|
Electric three-wheelers |
5% | Nil |
| E-rickshaws | 5% |
Nil |
|
E-bicycles |
5% | Nil |
| Hybrid vehicles | 28% |
Applicable |
The reduced GST Rate on Electric Vehicles has significantly lowered the overall cost of owning an electric vehicle.
HSN Codes Applicable to Electric Vehicles
Businesses dealing with electric vehicles should use the correct GST HSN code while charging GST.
|
Vehicle Category |
HSN Code |
GST Rate |
|
Electrically operated motor cars |
8703 | 5% |
| Electric buses | 8702 |
5% |
|
Electric motorcycles and scooters |
8711 | 5% |
| E-bicycles | 8711 |
5% |
Proper classification is important to ensure that the correct GST Rate on Electric Vehicles is applied. Selecting the correct HSN code is essential to apply the appropriate GST rate and avoid compliance issues. Use our GST HSN Tool for Electric Vehicles to quickly search and verify the applicable HSN codes for EVs, batteries, and charging equipment.
GST Rate on Electric Vehicles vs Conventional Vehicles
The lower GST Rate on Electric Vehicles gives EVs a significant tax advantage over conventional vehicles.
|
Particulars |
Electric Vehicles |
Petrol/Diesel Vehicles |
|
GST Rate |
5% | 28% |
| Compensation Cess | Nil |
Up to 22% |
|
Overall Tax Burden |
Lower | Higher |
| Environmental Impact | Lower |
Higher |
The concessional GST Rate on Electric Vehicles reduces the upfront purchase cost and promotes sustainable transportation. If you want to understand how cess is calculated and which vehicles attract higher rates, read our detailed guide on GST Compensation Cess on Cars.
Can Businesses Claim Input Tax Credit on Electric Vehicles?
Input Tax Credit on electric vehicles is governed by Section 17(5) of the CGST Act, 2017.
Generally, ITC on motor vehicles used for passenger transportation is blocked unless the vehicles are used for:
- Further supply of vehicles
- Transportation of passengers
- Driver training services
- Transportation of goods
Businesses such as EV dealers, leasing companies, ride-hailing operators, and passenger transport service providers should evaluate their ITC eligibility before claiming credit. You can also explore the benefits of GST registration to understand how GST compliance can support your business growth and tax management.
The availability of ITC does not impact the applicable Electric Vehicles, but it can reduce the effective tax cost for eligible businesses.
Why Did the Government Reduce the GST Rate on Electric Vehicles?
The government reduced the GST Rate on Electric Vehicles from 12% to 5% to encourage faster EV adoption.
The lower GST Rate on Electric Vehicles aims to:
- Reduce dependence on fossil fuels
- Encourage sustainable transportation
- Lower carbon emissions
- Support domestic EV manufacturing
- Make electric vehicles more affordable
The reduced GST Rate on Electric Vehicles complements initiatives such as the FAME Scheme, PM E-DRIVE Scheme, and the deduction available under Section 80EEB of the Income-tax Act.
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Whether you are an EV manufacturer, battery supplier, charging station operator, dealer, or importer, understanding the correct GST rates and compliance requirements is essential to avoid penalties and claim eligible Input Tax Credit (ITC).
Ebizfiling helps businesses manage end-to-end GST compliance with expert assistance, including:
- GST registration for EV businesses and startups
- HSN code classification and GST rate advisory
- GST return filing and reconciliation
- Input Tax Credit assessment under Section 17(5)
- E-invoicing and e-way bill compliance
- GST notices, assessments, and departmental responses
- Annual GST compliance and audit support
With a team of experienced tax professionals and technology-driven solutions, Ebizfiling enables businesses to focus on growth while ensuring seamless GST compliance.
Need assistance with GST registration or ongoing GST compliance for your electric vehicle business? Connect with Ebizfiling experts today for personalised guidance and stress-free compliance support.
Conclusion
The concessional GST Rate is one of the government’s most significant policy measures to accelerate electric mobility in India. As of June 2026, the GST Rate on Electric Vehicles continues to remain at 5%, making electric vehicles more affordable than conventional petrol and diesel vehicles.
Consumers planning to purchase an EV and businesses dealing in electric vehicles should stay updated with the latest notifications, GST HSN classifications, and ITC provisions to ensure proper compliance.
Understanding the applicable GST Rate can help taxpayers make informed purchasing and business decisions while benefiting from India’s transition towards cleaner mobility.
Frequently Asked Questions
1. Does the concessional 5% GST rate apply to all categories of electrically operated vehicles?
The 5% GST rate applies only to “electrically operated vehicles” that run solely on electrical energy derived from an external source or one or more electrical batteries fitted to the vehicle. This includes electric cars, electric buses, electric two-wheelers, e-rickshaws, and e-bicycles. Hybrid vehicles using both fuel and electric power are excluded from this definition.
2. How should manufacturers determine the correct HSN classification for electric vehicles under GST?
Electric vehicles are classified based on their type and intended use under the Customs Tariff Act, 1975. Electric passenger vehicles generally fall under HSN 8703, electric buses under HSN 8702, and electric motorcycles and scooters under HSN 8711. Incorrect HSN classification may result in disputes relating to GST rates, compensation cess applicability, and Input Tax Credit claims.
3. Is Input Tax Credit available on electric cars purchased by companies for employee transportation?
No. Under Section 17(5) of the CGST Act, ITC on motor vehicles designed to carry persons with approved seating capacity of up to 13 persons, including the driver, is blocked even if the vehicle is electric. ITC is available only when the vehicle is used for further supply, passenger transportation services, driver training, or transportation of goods.
4. What is the GST implication when an EV battery is sold separately from the electric vehicle?
When a lithium-ion battery is supplied independently as a replacement battery or spare part, it is treated as a separate supply and attracts GST at 18%. The concessional 5% GST rate applies only when the battery is supplied as an integral component of a complete electric vehicle.
5. How is GST determined in battery-swapping and Battery-as-a-Service (BaaS) business models?
The GST treatment depends on the contractual arrangement and whether the transaction qualifies as a supply of goods, leasing service, or composite supply. Subscription-based battery access models generally attract GST at 18%, whereas outright sale of batteries also attracts GST at 18%.
6. Can operators of public EV charging stations claim Input Tax Credit on charging infrastructure?
Yes. Businesses operating EV charging stations can generally claim ITC on chargers, transformers, installation services, civil works forming part of plant and machinery, and other business-related inputs, subject to conditions prescribed under Sections 16 and 17 of the CGST Act.
7. Does compensation cess apply to imported electric vehicles under GST?
No compensation cess is levied on electric vehicles. However, imported electric vehicles may still be subject to applicable customs duties, social welfare surcharge, and IGST at 5%, depending on the import classification and applicable exemptions.
8. How should GST be applied when an electric vehicle is supplied along with a charging unit?
The GST treatment depends on whether the transaction qualifies as a composite supply or mixed supply under Section 8 of the CGST Act. If the charging unit is naturally bundled and supplied in conjunction with the electric vehicle, the principal supply rules may apply. Otherwise, separate GST rates may be applicable to each component.
9. How does Ebizfiling assist businesses in evaluating ITC eligibility for electric vehicle fleets?
Ebizfiling helps businesses assess whether ITC restrictions under Section 17(5) apply to electric vehicle fleets used for employee transportation, leasing, ride-hailing operations, logistics, or passenger transport services. The assessment includes transaction structuring, documentation review, and GST compliance support.
10. How can Ebizfiling support EV businesses with GST classification and charging infrastructure compliance?
Ebizfiling assists EV manufacturers, battery-swapping operators, charging station providers, and fleet operators in determining the correct HSN codes, evaluating composite supply implications, identifying applicable GST rates, and ensuring compliance with invoicing, return filing, and Input Tax Credit requirements.
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