The GST Council's ongoing rationalisation exercise could represent a turning point for India's electric vehicle (EV) market, according to a report by media sources.

Until now, EVs have benefited from a concessional GST rate of 5%. However, the Group of Ministers (GoM) on rate rationalisation has recommended a substantial increase for premium four-wheelers.

Under the proposals, GST on four-wheeled EVs priced between Rs. 2 million and Rs. 4 million (US$ 22,820-45,640) would rise from 5% to 18%, while electric buses would continue to be taxed at a concessional rate.

The GoM has argued that the current uniform 5% rate disproportionately benefits high-end buyers, and that taxation should distinguish between affordable EVs intended for mass adoption and luxury EVs positioned as premium products.

Officials have noted that maintaining a concessional rate for expensive vehicles risks revenue loss and creates inequity within the system.

If accepted by the Council, the measure could significantly affect the pricing of luxury EVs in India, potentially influencing demand among affluent buyers.

The final decision rests with the GST Council, which is scheduled to meet on 3rd-4th September in New Delhi.