Tamil Nadu extends EV motor vehicle tax exemption until 2027

The extension ensures continuity of fiscal incentives for electric vehicles, offering regulatory certainty to manufacturers and buyers as the state reviews its long-term EV taxation framework.

The Tamil Nadu government has announced a two-year extension of its full road tax exemption for electric vehicles (EVs), offering a renewed policy push to promote sustainable mobility across the state. The exemption, which was set to lapse on January 1, 2026, will now remain in force until December 31, 2027, as per a government order issued on December 29.

The decision applies uniformly to both transport and non-transport categories of battery-operated vehicles. Officials said the move reflects the state’s commitment to maintaining momentum in electric mobility adoption while supporting industry growth and consumer uptake.

Industry push and rising EV adoption

The extension follows sustained representations from EV manufacturers and industry bodies, who urged the government to continue fiscal incentives amid a rapidly expanding market. According to inputs cited in the government order, Tamil Nadu’s share in India’s EV market has climbed to around 7.8 per cent in 2025, indicating steady progress in the transition towards cleaner transportation.

Industry stakeholders argued that extending tax benefits across all EV categories was critical to sustaining this growth trajectory. The Transport Commissioner also backed the proposal, recommending continuity of the exemption while ensuring alignment with the Tamil Nadu Electric Vehicle Policy 2023.

Policy review and future tax framework

Alongside the extension, the government has directed relevant departments to undertake a detailed study on the potential impact of introducing road taxes on electric vehicles in the future. The assessment will evaluate policy frameworks adopted by other Indian states and examine fiscal, environmental, and market implications before any changes are considered.

Tamil Nadu first rolled out the road tax exemption under its Electric Vehicle Policy 2019 as part of a broader incentive package aimed at building a robust EV ecosystem. Initially valid until 2022, the benefit was later extended by three years before the current two-year renewal.

The latest move signals the state’s intent to balance long-term revenue considerations with its clean energy and climate objectives, while providing policy stability to EV buyers and manufacturers in the near term.