Quick Highlights:Government restructures GST into two slabs: 5% (Merit) and 18% (Standard).Electric vehicles (EVs) continue to enjoy the lowest 5% GST bracket.GST restructuring announced on India’s 79th Independence Day.Move aims to ease consumer burden and stimulate demand across industries.EV affordability reinforced, boosting India’s green mobility mission.New GST Reforms: EVs Continue at Only 5% SlabOn India’s 79th Independence Day, Prime Minister Narendra Modi announced a historic restructuring of the Goods and Services Tax (GST) framework, aimed at reducing consumer costs and boosting demand across multiple sectors. The reforms simplify the earlier multi-slab structure into just two categories — Standard (18%) and Merit (5%) . While this shift impacts a broad spectrum of industries, the electric vehicle (EV) sector has once again emerged as the biggest beneficiary.Simplified GST Slabs: Standard vs MeritUntil now, India’s GST system divided goods and services into four slabs: 5%, 12%, 18%, and 28%. The latest reform streamlines this complex structure into two clear brackets:Merit Category – 5%Standard Category – 18%This change is expected to reduce administrative hurdles, improve compliance, and offer greater clarity to both businesses and consumers. Importantly, the government has strategically retained essential and future-focused commodities — like EVs — in the lowest 5% tax slab , strengthening its commitment to clean mobility.EVs Retain 5% GST AdvantageElectric vehicles have consistently enjoyed a lower GST rate compared to internal combustion engine (ICE) vehicles. Petrol and diesel passenger cars, for instance, often fell in the highest tax bracket of 28%, making them significantly more expensive. By contrast, EVs, regardless of their size or segment, including luxury electric cars and two-wheelers, remain in the 5% GST slab even after the restructuring.This distinction sends a clear signal: the government is determined to accelerate EV adoption by making them more financially attractive to Indian consumers. Whether it’s an entry-level electric scooter or a high-end luxury EV, the price benefit stemming from reduced taxation is substantial.Boost to India’s EV Adoption GoalsIndia has set ambitious targets for EV penetration by 2030, with specific goals of 30% electrification of private cars, 70% for commercial vehicles, and 80% for two- and three-wheelers . The continuation of the 5% GST slab directly supports these objectives. By maintaining affordability, the government ensures that the transition to EVs is not limited to affluent urban buyers but extends to mass-market consumers across the country.Consumer and Industry ImpactFor consumers, the GST reform means a lower burden on purchases of EVs compared to conventional vehicles. Coupled with state-level subsidies, FAME-II incentives, and falling battery costs, this tax structure makes EV ownership increasingly viable.For the industry, it simplifies pricing strategies and enhances competitiveness against ICE vehicles. Domestic EV manufacturers, startups, and global automakers entering the Indian market now have a stronger business case to expand operations.ConclusionIndia’s latest GST reforms are more than just a tax restructuring exercise. By continuing to classify EVs under the lowest 5% slab, the government is reinforcing its vision for a greener, cleaner, and more sustainable mobility ecosystem. This reform is likely to act as a catalyst for faster EV adoption, aligning with India’s climate goals and economic growth ambitions.