Tamil Nadu extends full EV road tax exemption, offering relief till 2027
Tamil Nadu has extended its 100 percent road tax exemption for electric vehicles until December 31, 2027, providing continued tax relief for EV buyers and added policy certainty for manufacturers. The extension applies to both electric two-wheelers and four-wheelers registered within the state and was confirmed through a government order issued this week.
The decision comes as electric vehicle adoption in Tamil Nadu continues to rise, though growth has varied across vehicle segments and regions. By extending the incentive for another two years, the state government aims to maintain momentum in the transition towards electric mobility.
Background of the exemption
The road tax waiver was first introduced under the Tamil Nadu Electric Vehicle Policy in 2019. It was originally valid until the end of 2022 and was subsequently extended to December 31, 2025. With the earlier deadline nearing, industry stakeholders had urged the government to continue the incentive, citing the need for longer-term visibility. The latest extension reflects the state’s acceptance of those concerns.
Impact on buyers and industry
Road tax accounts for a notable portion of a vehicle’s on-road price. For electric vehicles, eliminating this cost helps reduce the upfront price difference compared with petrol or diesel models, particularly in the two-wheeler and entry-level car segments where affordability plays a key role in purchase decisions.
For manufacturers, the extended exemption offers greater planning clarity. Investments in vehicle production, component supply chains and charging infrastructure typically span several years, and longer incentive windows help reduce uncertainty when committing capital and resources.
Adoption trends and challenges
Industry estimates suggest that electric vehicles accounted for around 7.8 percent of new vehicle registrations in Tamil Nadu in 2025. Adoption has been stronger in electric scooters and commercial delivery fleets, while passenger car uptake has been relatively slower.
Challenges remain, especially around the uneven availability of charging infrastructure beyond major urban centres. Grid upgrades, battery supply chains and recycling systems are also still evolving. The extension of the road tax exemption does not directly address these structural issues but ensures that existing incentives remain in place while broader ecosystem measures are developed.
State officials have indicated that the continued exemption is intended to lower purchase costs, encourage a gradual shift away from internal combustion engines, support local manufacturing and supplier networks, and contribute to reduced urban air pollution over time.
With the exemption now confirmed through the end of 2027, Tamil Nadu remains among the few Indian states offering a full road tax waiver on electric vehicles for an extended period. Other elements of the state’s EV roadmap, including charging expansion and grid integration, are expected to be taken up separately.
