Gujarat Budget 2025-26: Motor Tax On EVs Reduced To 1%

In a major relief for electric vehicle (EV) buyers in the state, Gujarat finance Minister Kanubhai Desai has proposed offering a rebate of 5% on motor vehicle tax on “fully-battery” operated EVs.

He made the announcement during his Budget speech yesterday (February 20). With this, the motor vehicle tax on EVs in the state will now effectively be charged at 1% from 6% earlier. 

“To realise the idea of ‘Green Growth’ envisaged by the Hon’ble Prime Minister for fostering and conservation of the environment, a people oriented and environment friendly decision has been taken to give rebate of up to 5% on motor vehicle tax on fully battery operated electric vehicles which are presently taxed up to 6% lumpsum motor vehicle tax so that resultant effective tax rate is 1%,” said Desai. 

In his speech, Desai also earmarked INR 50 Cr for the development of EV charging infrastructure facilities in the state.

Meanwhile, the finance minister also said that artificial intelligence (AI) laboratories will be set up at Ahmedabad’s LD Engineering College and six other government technical institutions to help the state’s youth “adapt and benefit” from AI. 

While noting that the government was committed towards making Gujarat an AI Hub, he also noted that an AI taskforce, comprising various experts,has already been constituted to enhance the usage of AI in various sectors of the state. 

Desai also said that state-backed incubators i-Hub and i-Create will be expanded to the four regions of Gujarat to catalyse the local startup ecosystem. 

This came on the same day as Uttar Pradesh finance minister Suresh Kumar Khanna also presented the state’s budget. In his speech, Khanna earmarked INR 5 Cr towards developing an AI city in Lucknow and an additional outlay of INR 1 Cr for establishing a center of excellence (CoE) for AI education in the state.