GOVERNMENT VEHICLE TAX RULES IN 2025

 1. Central Level

GST & Compensation Cess

.GST on new vehicles: 28% base rate, plus compensation cess based on engine size:

.Small cars (<1200 cc): +1%

.1200–1500 cc: +3%

.1500 cc / SUVs: +15–22% 

.Electric Vehicles (EVs): taxed at 5% GST, no cess

GST on Used Vehicles

.Small petrol/diesel cars: 12% GST

.Larger petrol/diesel cars: 18%

.Used EVs: 5% GST, no cess

 2. Road & Registration Tax (State-wise)

.State governments levy a one-time road tax (mostly for private vehicles) at registration.

State	Petrol/Diesel Car Tax (approx)	EV / Hybrid Treatment
Maharashtra	11% (<₹10L), 13% (>₹10L), +2% on diesel	100% exemption on registration & road tax; toll-free expressways
Karnataka	~13–18% (based on price)	EVs mostly exempt (0%) + diesel surcharge
Delhi	10% (<₹10L), 12.5% (>₹10L); diesel discouraged	EVs & hybrids up to ₹20L exempt road tax & registration
UP	8–10%, +2% diesel surcharge	100% waiver on EV/hybrid road tax & registration
Gujarat	6% (<₹10L), ~12% (>₹10L); diesel premium	EVs taxed at just 1% until Mar 2026
West Bengal	10% (<₹10L), 13% (>₹10L); +2% diesel	Partial EV benefits
Tamil Nadu	+	Luxury tax hike to 20% on cars >₹20L—sales dropped by 18%
Madhya Pradesh	Luxury vehicles taxed at 16%; EV two-wheeler tax rose from 1% to 4%
Kerala	—	EVs ≤₹15 L: 5%, ₹15‑20 L: 8%, >₹20 L: 10%

Note: Private cars typically pay one-time road tax, valid for up to 15 years; commercial vehicles pay yearly/quarterly .

 3. EV & Hybrid Incentives

.Maharashtra: EV registration & road tax exempt; toll-free on major expressways for 5 years; up to ₹2 lakh incentive on commercial EVs 

.UP: Subsidies: ₹5K (2-w), ₹12K (3-w), ₹1L (cars); full tax waiver 

.Delhi-NCR: Extends EV/hybrid tax waiver for vehicles ≤₹20L 

.Gujarat: 1% EV road tax through March 2026 

 4. Toll & FASTAG Updates

.Two-wheelers remain toll-exempt on national highways 

.FASTAG annual pass (₹3000) starting 15 Aug 2025: ~200 trips or unlimited for cars/vans; delivers up to 70% saving 

.Maharashtra EVs get toll waiver across major expressways 

 5. What This Means for You

.EV Advantage: Across most states, EVs enjoy zero or minimal taxes, often with toll waivers and subsidies.

.Hybrids: Delhi, UP now include hybrids under EV tax benefits—watch for expansion.

.Diesel Premium: Diesel vehicles see an extra ~2% surcharge almost everywhere.

.Luxury Car Buyers: States like Tamil Nadu & MP impose hefty taxes (16–20%); some buyers register elsewhere to avoid the levy 

.Consumers: With the GST Council moving toward integrating cess by FY27, expect simplification in tax rates 

📌 Bottom Line

Buying a Diesel or Luxury Car?

Expect higher taxes, diesel surcharges, and fewer incentives:

• Diesel Surcharge: +2% in states like UP, WB, Maharashtra.

• Luxury Tax:

  • Tamil Nadu: 20% for vehicles >₹20L

  • MP: 16% road tax on high-end cars

Tip: Some buyers register in lower-tax states (e.g., Gujarat) to save lakhs—but check legality carefully.

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Commuting Cost-Efficiently?

New Toll Benefit in 2025:

• FASTAG Annual Pass @ ₹3,000

  • Launch: From August 15, 2025

  • Covers: 200 highway trips or unlimited access (passenger cars, vans)

  • Savings: Up to ₹10,000/year for frequent commuters

Bonus: EVs in Maharashtra get 100% toll waiver on expressways like Atal Setu.