EV Subsidy in India 2026

Foundations

What people mean by subsidy, and why it causes so much confusion

Three completely different things get called an EV subsidy in India, and mixing them up is why nobody can agree on the number.

A demand incentive

Actual money the government pays towards your purchase. It comes off the price at the dealership and the manufacturer gets reimbursed afterwards. This is what most people picture. It is also the one category that no longer applies to private cars.

A tax exemption

The government charges you less tax than it would on a petrol car. Nothing gets paid to you. GST works this way, and so does road tax in states that waive it. There is no cheque, no application, no portal. The saving is invisible because it never shows up as a line item saying subsidy.

A fee waiver

A charge that would normally appear on your bill is set to zero. Registration fee is the main one. Small compared to GST, but it is real money and it applies across the country.

Who pays for what

Benefits reach you through three separate authorities that do not coordinate with each other. Knowing which layer a benefit sits in tells you who to ask when something goes wrong.

Registration fee sits slightly apart. It is waived by a central road transport notification rather than by a state, which is why it applies everywhere.

Two buyers picking the same car in different states can end up more than a lakh apart on the road, entirely because of the third row. That is the single most useful thing to understand before you start comparing prices.

Why outdated numbers keep circulating

India has run three central EV schemes in a decade, and every one of them left a trail of blog posts behind.

FAME I started in 2015 as a pilot. FAME II followed in 2019 with a much larger budget and, for a while, covered some four-wheelers in commercial categories. That is the source of most surviving claims about a central subsidy on cars. FAME II has ended.

PM E-DRIVE replaced it with ₹10,900 crore and a deliberately narrower brief. Two-wheelers, three-wheelers, buses, trucks, ambulances, plus charging infrastructure. Private cars are not in it.

So when a page tells you about a central subsidy on an electric car, it is usually not lying. It is just describing a scheme that no longer exists. Check the publication date before you trust any figure on this subject, including this one.

The central layer

PM E-DRIVE in detail

The scheme runs to 31 March 2028 with an outlay of ₹10,900 crore. By February this year the government said it had supported more than 28 lakh vehicles.

Around ₹2,000 crore of that is earmarked for charging infrastructure, targeting over 72,000 public charging points. That is the part that reaches car buyers, indirectly and slowly. Our city charging guides track what has actually been installed.

What it pays for

Conditions that catch people out

• The vehicle has to be fitted with an advanced battery. Lead-acid models do not qualify.
• One beneficiary can claim for one vehicle per category. Buying two scooters does not get you two incentives.
• Aadhaar e-KYC is mandatory. Without it the dealer cannot generate your voucher.
• The ceiling is on ex-factory price, not on-road. A scooter that crosses ₹1.5 lakh loses the incentive entirely rather than getting a reduced one.

If a salesperson mentions a central subsidy on a car, ask which scheme. That question usually ends the conversation.

GST, which is where the real money is

This is the biggest number in the whole guide, and nobody calls it a subsidy because it never arrives as a payment. It is a lower tax rate sitting quietly inside the price you were quoted.

Electric vehicles are taxed at 5% under HSN 870240, and the rate does not change with the vehicle. Scooter, car, e-rickshaw, all 5%.

Petrol and diesel cars used to sit at a flat 28% plus cess. The 56th GST Council meeting changed that with effect from 22 September 2025. Smaller models now attract 18% and larger SUVs and high-capacity engines attract 40%.

The related rates people get wrong

• Charging as a service is 5%. This keeps public charging cheaper than it would otherwise be.
• The charger you install at home is 18%. It is equipment, not a service.
• Servicing an EV is 18%, same as any vehicle service.
• A battery sold on its own is 18%, and battery swapping as a subscription is also 18%.

None of this needs claiming. It is already priced in before you walk into the showroom.

Registration fee, waived nationwide

This one gets missed because people fold it into road tax. They are different charges with different authorities behind them.

Under MoRTH notification G.S.R. 525(E), battery-operated vehicles are exempt from the fee for issue or renewal of a registration certificate and for assignment of a new registration mark. Central notification, so it applies in every state regardless of what your state EV policy says.

It is a smaller number than road tax or GST. It is also the one benefit you can count on without checking where you live.

The green number plate

Not a financial benefit, but it is what makes several other benefits enforceable, so it belongs here.

Private electric vehicles get a green plate with white lettering. Commercial electric vehicles get a green plate with yellow lettering. Only full battery electric vehicles qualify. A hybrid, however efficient, uses a normal plate.

The plate is how traffic police, toll operators and parking systems identify an EV on sight. In states that offer toll exemption for EVs, this is the thing that gets you waved through. It is issued as part of normal registration and you do not apply for it separately.

Section 80EEB, and the window that closed

Section 80EEB of the Income Tax Act allows a deduction of up to ₹1,50,000 on interest paid on a loan taken to buy an electric vehicle. It is quoted on almost every EV page in the country. For anyone buying today it does not apply.

The condition is on the sanction date. The loan had to be sanctioned between 1 April 2019 and 31 March 2023. Anything sanctioned on or after 1 April 2023 does not qualify, and no fresh claim can be opened under this section.

If your loan is from inside that window

You can keep claiming every year until the loan is repaid. Two conditions come with it. You must be an individual rather than a company or a firm, and you must file under the old tax regime. If you have moved to the new regime, the deduction is gone even if your loan qualifies.

The state layer

How to read a state EV policy

State policies are long documents written for manufacturers as much as buyers. Five things decide whether any of it reaches you.

• The policy window. A benefit that expires in eight months is worth less than one running to 2030, because delivery waits can eat the difference.
• Whether the road tax waiver is full or partial, and whether it has a price ceiling on it.
• Whether the purchase subsidy covers private cars at all, or only two-wheelers and commercial vehicles. Most cover the latter.
• Whether the subsidy tapers year on year. Several start high and shrink annually, so buying in year three is very different from year one.
• Whether there is a cap on total applicants or a fixed budget. Money can run out long before the policy period ends.

The last two are where most disappointment comes from. A policy can be technically in force and completely out of money.

State by state

Cash subsidies on private cars are rare. Most of what you get sits in tax and fee waivers, and where a state pays out mainly for two-wheelers or commercial vehicles, that is noted.

Position as reported on 30 July 2026. Road tax is a state levy and these rules are revised often. Confirm the live position with your RTO or dealer before you book.

Five traps worth knowing about

The made-in-state condition

Uttar Pradesh tied its incentives to EVs manufactured or assembled inside the state from 14 October 2025. The car you want may be identical to one that qualifies and still miss out because of where it was built. Ask the dealer for the manufacturing location, not the brand.

The price ceiling

Delhi waives road tax on battery electric cars up to ₹30 lakh. Cross that and you pay in full. Ceilings are usually on ex-showroom price, so a variant upgrade can quietly push you over.

Budget exhaustion

Telangana's exemption covered the first 5,000 private electric four-wheelers. Delhi's scrappage incentive has an applicant cap. These are first come, first served, and nobody publishes a running counter.

Re-registration when you move

Road tax belongs to the state where the vehicle is registered. Buy in Delhi with a full waiver, move to Karnataka two years later, and re-registration can mean paying lifetime tax you thought you had avoided. Worth thinking about if a transfer is likely.

Policy review

Tamil Nadu has signalled a review. Karnataka already rolled back. Madhya Pradesh let its exemption lapse. A waiver you read about in March may not be there in August.

Doing it

The PM E-DRIVE claim process, step by step

This applies if you are buying a two-wheeler or three-wheeler. Car buyers can skip to the next section, because there is no claim to make.

The whole thing happens at the dealership on the day of registration. You do not file anything yourself.

1. At the time of registration with the RTO, the dealer generates an e-voucher from the PM E-DRIVE portal carrying a unique identification number.
2. The dealer runs your Aadhaar e-KYC using face authentication through the PM E-DRIVE app. This is mandatory. Without it the voucher cannot be generated.
3. A link to download the e-voucher goes to your registered mobile number.
4. You sign the e-voucher and hand it back to the dealer.
5. The dealer signs it too and uploads it to the PM E-DRIVE portal.
6. The signed voucher is sent to both of you by SMS. Keep it.

The incentive comes off the purchase price at the dealership itself, so you pay the reduced amount. The manufacturer claims reimbursement from the government later. That timing is their problem, not yours.

What happens when, in order

The benefits land at different points in the purchase. Knowing the order tells you when to check what.

1. Before you book, confirm your state's current position with the RTO or a second dealer. Do not rely on a policy page you read last month.
2. If you are scrapping an old vehicle, get it scrapped and collect the certificate of deposit first. Doing it after the new purchase usually disqualifies the incentive.
3. Ask for a written on-road breakup before you pay anything. Every benefit that applies should already be visible on it.
4. At booking, GST is already inside the ex-showroom figure. Nothing to do.
5. At registration, the RTO applies the road tax waiver and the registration fee exemption. Your dealer handles the filing.
6. If your state pays a purchase subsidy, it either comes off the invoice or goes through the state EV portal. Ask which, and get it in writing.
7. At the end of the financial year, if your loan qualifies under 80EEB, claim it in your return.

Documents to have ready

Nothing exotic, but missing one of these on the day slows everything down.

• Aadhaar, with the linked mobile number active and in your hand
• PAN card
• Address proof matching the state you want the vehicle registered in
• Certificate of deposit from a registered scrapping facility, if you are claiming a scrappage incentive
• Loan sanction letter showing the sanction date, if you intend to claim 80EEB
• Annual interest certificate from your lender, at the end of each financial year
• The signed e-voucher and SMS confirmation, for two and three-wheeler purchases

Keep the invoice and the registration certificate together. If a waiver is applied incorrectly, those two documents are what the RTO will ask for.

Reading your on-road price breakup

Ask for this in writing before you pay. It is the only place where you can see whether the benefits actually reached you.

Situations the standard guides skip

Buying a used electric car

Purchase subsidies apply to new vehicles only. The road tax was already paid, or waived, by the first owner, so there is nothing further to claim. What you inherit is the green plate and whatever toll or parking treatment comes with it. Battery warranty transfer is the thing to check instead, and that varies by manufacturer.

Buying through a company

Section 80EEB is for individuals only. Companies and firms cannot use it. What a business can do instead is claim depreciation on the vehicle as a business asset, which is a different mechanism with different rules. Talk to your accountant rather than your dealer about this one.

Hybrids and plug-in hybrids

Most state EV policies cover battery electric vehicles only. Hybrids do not get the green plate and usually do not get the road tax waiver. Karnataka's fuel agnostic policy is the exception, and even there the treatment is not identical to a pure EV. Do not assume a strong hybrid qualifies for anything.

Commercial and fleet use

This is where the money still is. Maharashtra pays up to ₹2 lakh on electric four-wheelers used for transport. Delhi pays on N1 goods carriers. PM E-DRIVE funds e-trucks and e-buses. If you are buying for a business rather than for yourself, the picture is considerably better than for a private car.

Reference

Common questions

• Is there a government subsidy on electric cars in India in 2026?

  Not from the centre. PM E-DRIVE funds two-wheelers, three-wheelers, buses, trucks and ambulances, and leaves private cars out. A few states pay a purchase subsidy, and most waive road tax and registration, which is usually worth more anyway.

• What is the GST rate on electric vehicles?

  Five percent, under HSN 870240, for scooters, cars and e-rickshaws alike. Petrol and diesel cars moved to 18% for smaller models and 40% for larger SUVs on 22 September 2025.

  Charging as a service is also 5%. A home charger, EV servicing and a separately sold battery are all 18%.

• Can I still claim ₹1.5 lakh under Section 80EEB?

  Only if your loan was sanctioned between 1 April 2019 and 31 March 2023 and is still running. Loans sanctioned on or after 1 April 2023 do not qualify and no new claim can be started.

  You also have to be an individual rather than a company, and you have to file under the old tax regime.

• Do electric cars pay road tax in India?

  It depends entirely on where the car is registered. Delhi, Maharashtra, Gujarat, Rajasthan, Telangana, Tamil Nadu and Odisha waive it in full, sometimes with a price ceiling. Kerala gives half off for five years. Karnataka reintroduced lifetime tax in 2026 and Madhya Pradesh let its exemption lapse in March.

• Is the registration fee waived for electric vehicles?

  Yes, nationwide. MoRTH notification G.S.R. 525(E) exempts battery-operated vehicles from the fee for issue or renewal of a registration certificate and for a new registration mark. Unlike road tax, this does not depend on your state.

• How do I actually claim the PM E-DRIVE subsidy?

  You do not file anything. At registration the dealer generates an e-voucher on the PM E-DRIVE portal, runs your Aadhaar e-KYC using face authentication, and sends you a download link by SMS. You sign the voucher, the dealer signs and uploads it, and the incentive comes off your purchase price on the spot.

  This applies to two and three-wheelers. There is no equivalent for private cars.

• Which state is cheapest for buying an electric car?

  For a private car it comes down to price band. Delhi waives road tax and registration up to ₹30 lakh and adds a scrappage incentive. Maharashtra combines a full waiver with toll exemption on major expressways. Gujarat and Rajasthan pay per kWh, capped at ₹1.5 lakh.

  Karnataka, Kerala, Madhya Pradesh, Punjab and Haryana are the weakest right now.

• Do hybrids get the same benefits?

  Generally no. Green number plates go to full battery electric vehicles only, and most state waivers follow the same definition. Karnataka's fuel agnostic policy is the exception, and even there hybrids are not treated identically to EVs.

• What happens to my road tax waiver if I move states?

  Road tax belongs to the state of registration. Move to a state that charges it and re-registration can mean paying lifetime tax you thought you had avoided. If a transfer is likely within a few years, factor that into the comparison.

• Do I get anything buying a used electric car?

  No purchase subsidy, because those apply to new vehicles. Road tax was settled by the first owner. You inherit the green plate and whatever toll or parking treatment comes with it. Check the remaining battery warranty and whether it transfers, since that varies by manufacturer.