EV policy in India works on two levels at once — central government schemes that apply nationwide, and state-level incentives layered on top that vary significantly by where you register your vehicle.
The central GST framework
Since GST 2.0 took effect on 22 September 2025, electric vehicles are taxed at a concessional 5% GST, with no additional cess — compared to 18% or 40% for petrol/diesel vehicles depending on size and engine capacity. This is a flat, nationwide rate that applies regardless of which state you're in, and it's the single largest incentive most EV buyers in India actually receive, often larger than any state-level purchase subsidy.
FAME and its successors
The FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme has been the central government's main EV subsidy vehicle for years, primarily targeting electric two-wheelers, three-wheelers, and commercial vehicles rather than private cars — private electric cars are largely left to the GST advantage rather than a direct FAME-style subsidy. Central schemes have evolved over time, so check the current programme's eligibility (vehicle category, battery chemistry requirements) before assuming a specific vehicle qualifies.
Why state policy matters just as much
On top of the central GST rate, individual states run their own EV policies covering:
- Road tax exemptions (often 100% for a defined period)
- Registration fee waivers
- Purchase incentives, usually calculated per kWh of battery capacity with a cap per vehicle and a limit on how many buyers qualify (first-come, first-served up to a registered-owner cap)
These vary significantly by state, and — importantly — they often come with expiry dates or registration caps that aren't always obvious from a dealer's sales pitch. Punjab's policy, for example, ties its road tax exemption to a specific 3-year window from a 2023 notification, and its purchase incentives are capped to the first 1,00,000-plus registered owners depending on vehicle category. See our Punjab EV Policy guide for the full, sourced breakdown.
What this means practically
- The 5% GST rate is nationwide and doesn't expire on a per-buyer basis — it's a standing tax rate, not a limited-time offer.
- State incentives on top of that are genuinely time- and quantity-limited in most cases — don't assume they'll be there indefinitely.
- Always check the current state policy for wherever you're registering the vehicle, not just where you're buying it, since registration state is usually what determines eligibility.
Check our EV Policy hub for jurisdiction-specific policy records, each with its official source and verification date.
GST rate per GST 2.0, effective 22 September 2025. State-level details vary — this article summarizes how the system fits together, not the specific terms of every state's policy.