UP waives registration tax on hybrid vehicles

The Uttar Pradesh government has brought in a policy for a 100% waiver on registration tax of hybrid vehicles in the state. 

The policy, which gives “100% waiver on registration fee of strong hybrid electric vehicles and plug-in hybrid electric vehicles, is effective immediately.

The state charges 8% road tax on vehicles that cost less than ₹10 lakh, and 10% on vehicles costing more than ₹10 lakh (ex-showroom). The move will provide benefits of up to ₹3.5 lakh to customers who buy hybrid cars of Maruti Suzuki, Honda, and Toyota, among others.

Shares of Maruti Suzuki rose in the past two trading sessions on the new policy and were up around 1% at 1pm on Wednesday.

Maruti Suzuki India Ltd chairman RC Bhargava told Press Trust of India that the registration waiver by the Uttar Pradesh government would also inspire other states to consider such proposals.

The move recognizes the fact that multiple technologies are required to reduce carbon emissions and oil imports, Bhargava said. 

Earlier, in March 2023, the UP government had announced a policy of zero registration cost on electric vehicles (EVs).

The total tax incidence on hybrid vehicles in the country is currently at 43%, which is inclusive of goods and services tax, while battery electric vehicles attract a tax of about 5%.

Hybrid EVs are powered by an internal combustion engine and one or more electric motors, which uses energy stored in batteries charged through regenerative braking and by the internal combustion engine. These features result in increased efficiency and better fuel economy, considered environment friendly over the regular combustion engines.

Toyota Kirloskar’s Innova Hycross and Urban Cruiser Hyryder and Maruti Suzuki’s Invicto and Grand Vitara are some of the top hybrid cars in India. Some models of Honda’s mid-sized sedan City also come with hybrid technology.

UP is one of the largest markets for passenger vehicles in India, with total sales of 236,097 units in the first half  of the year (January-June), according to Federation of Automobile Dealers Associations (FADA) data. 

FADA chairperson Ankit Raj told The Hindu Businessline that the move will help the sales of strong hybrid vehicles in the state, although the number of buyers is small right now.