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This exemption applies to both electric two-wheelers and four-wheelers registered in the state. The expansion was announced through a government order issued this week.
The decision comes at a time when EV adoption continues to increase in Tamil Nadu, although progress remains uneven across different segments and regions.
Tamil Nadu extends EV road tax exemption till 2027
Road tax exemption was first introduced in 2019 under the Tamil Nadu Electric Vehicle Policy. Initially it was valid till December 31, 2022, later it was extended till the end of 2025.
With that deadline approaching, industry bodies and manufacturers requested that the incentives be continued – a recommendation that the state has now accepted.
What do EV tax breaks mean for buyers and manufacturers?
Road tax forms a significant part of the upfront cost of a vehicle. For electric vehicles, removing this cost reduces the entry barrier for buyers – especially in the two-wheeler and compact car segments.
This expansion also provides manufacturers with greater planning certainty. Factories, suppliers and charging infrastructure projects typically operate on multi-year timelines, and short incentive windows complicate investment decisions. A longer policy horizon changes those calculations.
EV adoption level in the state and remaining challenges
According to industry estimates, the electric vehicle adoption rate in Tamil Nadu is set to reach about 7.8 percent in 2025.
Growth in electric scooters and delivery fleets has been stronger than in passenger cars. Charging infrastructure remains uneven outside major cities, while grid modernization and battery supply chains are still developing.
The expansion does not address these structural challenges – it simply keeps the current incentive framework in place.
Officials say the measure aims to:
- Reduce purchasing costs for consumers
- Encourage move away from petrol and diesel
- Support local manufacturing and supplier ecosystem
- Contribute to reducing urban air pollution over time
This places Tamil Nadu among the few Indian states to offer full road tax exemption on EVs for such an extended period.
The exemption will now run until the end of 2027. Other elements of the state’s EV policy – including charging deployment, grid integration and battery recycling – are expected to be addressed separately.