Stocks of electric vehicle (EV) manufacturers, including Mahindra & Mahindra (M&M) and Ashok Leyland, faced a sharp decline following Maharashtra’s announcement of a motor vehicle tax hike in the state’s 2025 budget. The new proposal includes a 6% tax on EVs priced above Rs 30 lakh, which raised concerns among investors and led to a fall in EV stock prices.
M&M saw a dip of more than 3%, while Ashok Leyland also dropped over 3%. Other EV players such as Olectra Greentech and JBM Auto followed suit, with their stocks losing 2% and 3%, respectively. Additionally, Mahanagar Gas (MGL), a city gas distribution company, also reported a decline of 3% in its share price.
The proposed tax hike is expected to impact the luxury electric vehicle segment the most, with the tax threshold rising from Rs 20 lakh to Rs 30 lakh. Maharashtra government projects the hike could generate around Rs 170 crore in additional revenue. Overall, the motor tax increase is expected to boost the state’s revenue by Rs 1,125 crore.
Deputy Chief Minister Ajit Pawar, who also holds the finance portfolio, unveiled the plans as part of Maharashtra’s budget to drive higher revenue for the state. Along with the 6% tax on high-priced EVs, a 1% increase in taxes on non-transport CNG and LPG vehicles is expected to add Rs 150 crore in revenues for the state.
Moreover, the Maharashtra government also proposed a 7% motor vehicle tax on construction vehicles, which is expected to bring in Rs 180 crore, as well as a similar tax for light goods vehicles, projected to generate Rs 625 crore in fiscal 2025-26.
The announcement comes at a time when Maharashtra aims to promote the “Make in Maharashtra” initiative under its Industrial Policy 2025. Despite the tax hike, the state remains focused on attracting new investments to maintain its position as a preferred industrial hub.
