The shares of Mahindra & Mahindra (M&M) and Tata Motors dropped sharply in afternoon trade after a report said that an Indian tax panel has proposed to hike GST on some electric cars from the existing 5 percent to 18 percent.
M&M shares dropped more than 2 percent to trade at Rs 3,247 apiece, emerging as the top loser on the Nifty 50 index. Tata Motors shares were down nearly 1 percent to trade at Rs 685 apiece.
The Indian tax panel has proposed to increase the GST rate to 18 percent from the current 5 percent for EVs priced between Rs 20 lakh and Rs 40 lakh, Reuters reported. For cars priced above Rs 40 lakh, the panel has recommended raising the GST rate to 28 percent as such vehicles cater to the "upper segment" of the society and are largely imported rather than manufactured domestically, it added.
"The uptake of electric vehicles is increasing and while, the low rate of 5% is to incentivise faster adoption of electric vehicles, it is also important to signal that higher-priced EVs can be taxed at higher rates," Reuters quoted a document by the tax panel as saying.
The GST Council, which is set to meet between September 3 and September 4, to review prospective GST reforms, already has a proposal to completely do away with the 28 percent GST slab to introduce a simpler tax structure. Hence, the council may increase the tax on EVs to 18 percent or put them in the newly planned 40 percent category planned for certain luxury goods, the report cited a government source as saying.
Domestic automakers like Mahindra & Mahindra and Tata Motors have limited offering in the segment which reportedly faces a possible GST hike. If implemented, this will have a stronger impact on the luxury EV makers like Tesla, BYD, Mercedes and BMW, the report added.
In July 2025, Tata Motors led the Indian electric car market with nearly 40 percent market share, while M&M held 18 percent share. BYD held a 3 percent market share, while Mercedes and BMW together accounted for 2 percent of the market. Tesla is taking bookings but is yet to start deliveries.
The Nifty Auto index dropped 1 percent intraday to its day's low. M&M and Tata Motors shares were among the top losers on the index, along with Tube Investments of India.
(With inputs from Reuters)
Also read: Our LIVE blog on stock market updates
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
