Government Subsidies on Electric Vehicles in India 2025: Complete Guide

Introduction

To accelerate the adoption of electric vehicles (EVs), the Indian government, both at the central and state levels, offers a range of financial incentives. These subsidies can significantly reduce the upfront cost of buying an electric car or scooter, making them more accessible to the average consumer. Navigating these schemes can be confusing, but understanding them is key to maximizing your savings.

The year 2025 sees the continuation and evolution of these policies, with some states offering more aggressive incentives than others. Whether you’re considering an electric car for your family or an electric scooter for your daily commute, knowing what benefits you’re entitled to can make your purchase decision much easier and more economical.

This guide breaks down all the active EV subsidies and policies in India for 2025, helping you understand how much you can save and how to claim these benefits.

Central Government Scheme: FAME-II

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) India Scheme II is the primary central policy. While its initial tenure has concluded, its benefits are expected to be continued or replaced under a new banner in 2025.

Key Features of FAME-II (and its successor):

• For Electric 2-Wheelers: The subsidy was a key incentive of ₹10,000-15,000 per kWh, capped at a percentage of the vehicle’s cost. This directly reduced the ex-showroom price.
• For Electric 4-Wheelers: Subsidies were primarily offered for commercial fleet vehicles (like e-taxis) rather than personal cars, to boost public transport.
• Charging Infrastructure: A significant portion of the outlay is dedicated to establishing charging stations across the country.

State Government EV Policies

This is where the major benefits for personal electric car buyers lie. Many states have announced their own EV policies offering:

• Road Tax & Registration Charge Waiver: Most states, including Delhi, Maharashtra, Gujarat, and Karnataka, offer a 100% exemption on road tax and registration fees for EVs. This alone can save you thousands, even lakhs of rupees, depending on the car’s cost.
• State Subsidy (Top-Up): Some states provide an additional direct subsidy over and above the ex-factory price.
  • Example – Delhi: Offers a subsidy of up to ₹10,000 per kWh for e-2W (max ₹30,000) and up to ₹1.5 Lakh for e-cars.
• Scrapping Incentives: Some policies offer an additional incentive for scrapping an old internal combustion engine (ICE) vehicle and buying a new EV.

Other Financial Benefits

• Lower GST: EVs are taxed at just 5% GST compared to 28%+ for petrol/diesel cars. This is a massive saving baked into the ex-showroom price.
• Income Tax Deduction: Under Section 80EEB, you can claim a tax deduction of up to ₹1.5 Lakh on the interest paid on a loan taken to purchase an EV.

How to Claim These Benefits

The beauty of most of these subsidies is that they are passed on directly at the point of sale.

• At the Dealership: The car dealer will incorporate the FAME-II incentive (if applicable) and the state road tax waiver into your final invoice. You don’t need to run to government offices to claim them.
• Income Tax Benefit: You can claim this while filing your Income Tax Return (ITR) for the financial year in which you took the loan. Your bank will provide a certificate of the interest paid.

State-Wise EV Policy Highlights (2025)

Always check the latest policy updates for your state, as these incentives can be modified.

Conclusion

The total benefit from all these schemes can make an electric vehicle significantly more affordable. Before finalizing your EV purchase in 2025, always check the latest updates on the central scheme and specifically research the EV policy of your state to maximize your savings. An EV is not just an environmentally friendly choice but also a financially smart one when you leverage all available incentives.

FAQs

Q1. Are EV subsidies available for all electric vehicles? Subsidies under FAME-II were typically for vehicles with advanced batteries and motors that met specific technical criteria. Most EVs from reputable manufacturers like Tata, MG, and Hyundai qualify. Always confirm with the dealer.

Q2. Can I get a subsidy on a used electric vehicle? No, government subsidies are only applicable to the first purchase of a new electric vehicle from an authorized dealer.

Q3. How long will these EV subsidies continue? Most state EV policies are valid for a specific period (e.g., 3-5 years from notification). The central FAME policy is also reviewed periodically. The general trend is supportive, but the exact nature of incentives may evolve.

Q4. Do I need to apply separately for the road tax exemption? No, the dealer handles this process. The exemption will be reflected in your final on-road price calculation. You do not need to apply to the RTO separately.

Q5. Is the income tax benefit on loan interest available for all EVs? Yes, the deduction under Section 80EEB is available for any loan taken for the purchase of a new electric vehicle, regardless of the state you reside in. This is a central government benefit.

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