To encourage the use of eco-friendly modes of transport, the Uttar Pradesh government has announced that it will completely abolish registration tax on hybrid cars. Uttar Pradesh and Chandigarh are providing subsidies for hybrid vehicles. This new policy will affect popular models like Honda City, Toyota Innova Hycross, Maruti Invicto, Toyota Urban Cruiser Hyryder, Maruti Grand Vitara and Toyota Camry, to name a few. Let us take a closer look at the details of the new tax exemption policy for hybrid vehicles.
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Uttar Pradesh Hybrid Tax Exemption: Benefits up to Rs 3 Lakh
Earlier, Road Transport and Highways Minister Nitin Gadkari had recommended a change in the tax structure for hybrid vehicles. He proposed reducing the GST on hybrid vehicles from 28 percent to 12 percent. This reduction would have resulted in a significant discount of up to Rs 700,000 on popular models such as the Innova Hycross and the Maruti Grand Vitara.
Although this proposal was rejected by the Finance Ministry, the Uttar Pradesh government has announced a state subsidy for registration of hybrid vehicles. As part of its electric vehicle policy for 2022, the state government had waived registration fees for electric vehicles. Now, this subsidy has been extended to hybrid vehicles.
Initially, the government included all models ranging from Rs 1 million to Rs 1 crore in this rebate, but changes are expected to be introduced in due course. The new tax rebate will be applicable to all models registered up to October 2025. Previously, the registration fee was capped at 10 percent for all vehicles (petrol/diesel/hybrid) costing above Rs 1 million.
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Savings on popular models:
| Model name | Ex-Showroom Price | savings |
| Toyota Innova Hycross/ Maruti Invicto | 25.31 – 30.98 Lakh Rupees | Rs2,53,100 – Rs3,09,800 |
| Maruti Grand Vitara/Toyota Urban Cruiser Hyryder | Rs 16.66 – Rs 19.97 Lakh | Rs1,66,600 – Rs1,99,700 |
| Honda City e:HEV | 19.10 – 20.65 lakh rupees | Rs1,91,000 – Rs2,06,500 |
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Hybrid tax exemption in other states: Chandigarh
Prior to the implementation of Uttar Pradesh’s electric car policy, Chandigarh was the first state/union territory in the country to provide hybrid tax exemption. This initiative aimed to position Chandigarh as a ‘model city for electric cars’ and promote the use of clean emission technologies. The local government initially waived the full registration fee for all hybrid models sold between March 2023 and March 2028, including cars priced above Rs 1.7 crore and below Rs 1 crore (ex-showroom). However, later changes were made and currently, the Chandigarh Regional Transport Office offers tax exemption of up to 50 percent for hybrid models priced below Rs 2 crore (ex-showroom).
Do you think other states should follow Chandigarh and Uttar Pradesh and reduce taxes on hybrid cars?
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