Maharashtra Imposes 1% Tax on CNG, LNG, and High-End Cars: What Car Buyers Need to Know

From July 6, 2025, car buyers in Maharashtra will have to shell out more money while purchasing certain types of vehicles. The Maharashtra state government has officially implemented a 1% additional tax on private CNG, LNG vehicles and high-end petrol/diesel cars priced above ₹10 lakh.

This new policy is part of the state’s updated Motor Vehicle Tax rules and has raised many questions among car buyers, dealers, and the automobile industry. If you’re planning to buy a new vehicle in Maharashtra, here’s everything you need to know about this tax hike.

What is the New Tax Rule?

The Maharashtra government has introduced a 1% one-time tax that applies to:

• Private CNG (Compressed Natural Gas) vehicles
• Private LNG (Liquefied Natural Gas) vehicles
• Petrol/Diesel vehicles priced above ₹10 lakh

This 1% tax will be calculated on the vehicle’s cost and added to the existing road tax or registration charges paid during purchase. So, for example, if your car costs ₹15 lakh, you will now pay an extra ₹15,000 as tax under this new rule.

Who Will Be Affected?

The new tax will affect the following vehicle buyers:

1. Eco-conscious buyers who prefer CNG and LNG cars to save fuel and reduce pollution.
2. Premium/luxury car buyers planning to purchase vehicles priced above ₹10 lakh.
3. Fleet owners or individuals in cities like Mumbai, Pune, Nagpur, and Nashik where CNG vehicles are commonly used.

Electric vehicle (EV) buyers are not affected by this new rule, as EVs remain fully exempted from one-time taxes in Maharashtra.

Why Has This Tax Been Introduced?

According to the Maharashtra government, this move is intended to:

• Increase state revenue, especially from buyers of premium or alternative fuel vehicles.
• Balance the tax structure between different types of vehicles.
• Encourage a gradual shift to electric vehicles, which are cleaner and still tax-free.

However, this decision has sparked debate. CNG vehicles are considered more environmentally friendly than petrol or diesel models, and this added tax might discourage budget-conscious consumers from choosing cleaner options.

Impact on Buyers and the Auto Market

Here’s how the new rule could impact both customers and carmakers:

For Car Buyers:

• Higher upfront costs, especially for buyers of CNG and premium vehicles.
• CNG was earlier seen as a more economical choice—this benefit may now be reduced.
• Buyers may delay purchases or look for cheaper alternatives or EVs.

For Car Dealers & Manufacturers:

• Drop in CNG vehicle sales, especially in tier 1 and tier 2 cities.
• Luxury car sales may slow slightly, though high-end buyers may not be affected much.
• EVs may get more attention as buyers seek tax-free options with long-term savings.

Comparison With Other States

Several Indian states have already made changes to their vehicle tax policies:

• Delhi offers a 100% exemption on road tax for EVs.
• Gujarat and Tamil Nadu also offer incentives for EV adoption.
• Maharashtra itself provides incentives for electric two-wheelers and cars, which are not affected by this 1% hike.

But Maharashtra is possibly the first state to introduce a dedicated tax on CNG/LNG vehicles, which is surprising given the government’s past support for cleaner fuels.

Expert Opinions

Industry experts and car dealers have expressed concern:

“This decision may discourage buyers from switching to CNG, which is already a cleaner option. The move might push people back to petrol or diesel cars,” said a senior car dealer from Mumbai.

Environmentalists too are worried that taxing CNG vehicles sends the wrong message when the focus should be on promoting sustainable mobility.

On the other hand, government officials argue that luxury buyers can afford the extra cost, and the policy will not affect budget cars below ₹10 lakh, which form a majority of India’s vehicle sales.

Will This Push People Toward Electric Cars?

Yes, possibly. Since EVs are still tax-free in Maharashtra, many consumers may now consider switching from CNG or petrol to electric vehicles, especially with the rise in fuel prices and the availability of newer EV models.

Automakers like Tata Motors, MG, and Mahindra are already expanding their electric offerings, and the new tax might indirectly boost EV demand in the coming months.

Final Thoughts

The 1% additional tax on CNG, LNG, and high-end petrol/diesel vehicles is now a reality in Maharashtra. While it may seem small, this tax could impact buying decisions, especially for budget-conscious individuals and those considering CNG as a cost-saving choice.

At the same time, this tax does not apply to EVs, making them more attractive than ever. If you’re planning to buy a car in Maharashtra in 2025, it’s essential to compare your options carefully—including upfront cost, fuel type, tax implications, and long-term benefits.

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