GST Rate Differentials Impact on Electric Vehicle Registrations Across Indian States: A Panel Data Analysis (2017–2025)

Dhanwantari Sakharam Narawade; Pramila Shriram Patil

GST Rate Differentials Impact on Electric Vehicle Registrations Across Indian States: A Panel Data Analysis (2017–2025)

Author(s)	Ms. Dhanwantari Sakharam Narawade, Dr. Pramila Shriram Patil
Country	India
Abstract	Making the switch to electric vehicles is becoming more widely acknowledged as an essential tactic for attaining sustainable transportation and cutting greenhouse gas emissions. India, one of the world's fastest-growing auto markets, has taken a number of fiscal and regulatory measures to encourage the use of electric vehicles (EVs). The Goods and Services Tax (GST) reform, which was implemented in 2017, is one of these measures that significantly influences the cost structure of automobiles. Currently, internal combustion engine (ICE) vehicles are subject to a 28 percent GST rate, whereas electric vehicles are subject to a 5 percent concessional rate. This substantial pricing difference is meant to encourage the adoption of EVs. Nevertheless, there is still a dearth of scientific data assessing the efficacy of this tax disparity among Indian states. This study looks into how varying GST rates affected the number of electric vehicles registered in Indian states between 2017 and 2025. The study assesses how fiscal incentives affect EV adoption patterns while controlling for other factors including fuel prices, income levels, urbanization, and the availability of charging infrastructure using a panel dataset that includes annual observations from major Indian states. To identify the causal effects of changes in GST policy, the research uses panel data econometric approaches such as difference-in-differences estimation and fixed effects regression. The findings show that lower GST rates, especially following the 2019 adjustment that lowered the GST rate on EVs from 12 percent to 5 percent, have greatly increased EV registrations. The results show that states are more sensitive to GST incentives when they have superior charging infrastructure, higher income levels, and favorable EV legislation. Furthermore, it is shown that fluctuations in fuel prices enhance the GST incentive by motivating customers to switch to electric vehicles. By showing how indirect tax incentives can affect the adoption of green technologies in emerging economies, the study adds to the body of knowledge on environmental fiscal policy. The results also give policymakers important information on how well tax-based incentives support sustainable mobility. According to the report, while GST incentives are successful, their effects can be increased by coordinated state-level EV policies and accompanying investments in charging infrastructure. These understandings are crucial for creating integrated fiscal and environmental policies that can hasten India's shift to environmentally friendly transportation.
Keywords	Adoption, electric vehicle, GST, taxes
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-09-17

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GST Rate Differentials Impact on Electric Vehicle Registrations Across Indian States: A Panel Data Analysis (2017–2025)

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