Delhi Cabinet to Consider 50% Tax Waiver for Hybrid Cars

Delhi’s draft Electric Vehicle Policy 2026-30 is set to be presented to the Cabinet, proposing a 50% road tax and registration fee exemption for strong hybrid cars priced up to ₹30 lakh, and Indian Express report stated.

The proposal arrives as the current framework nears its final expiry following multiple extensions. Over the past two months, the Delhi Transport Department has received and is reviewing more than 700 public suggestions regarding the draft.

The pending policy draws a technical distinction between hybrid models. Strong hybrids can operate entirely on electric power at lower speeds, whereas mild hybrids rely on smaller batteries solely to assist internal combustion engines during acceleration.

Lessons From Uttar Pradesh

Tax variations alter buyer behaviour. Delhi has experienced an estimated annual revenue leakage of ₹400 crore to ₹500 crore, as buyers register hybrid vehicles in neighbouring Uttar Pradesh and Haryana to avoid local fees, CUTS International said in its submission.

Uttar Pradesh implemented a 100% road tax exemption for strong hybrids in July 2024. Following the policy shift, the state recorded a 175% average monthly registration increase from a baseline of 538 vehicles, according to auto industry data presented in the report.

 This surge drove Uttar Pradesh's monthly revenues in the category up 60%, rising from an average of ₹29 crore to ₹47 crore.

"In just one year, UP collected revenue of ₹500 crore by incentivising strong hybrid vehicles," a senior transport official told The Indian Express.

A Practical Transition Bridge

Industry groups are reportedly in favour of the waiver. The International Road Federation (IRF) backed the proposal in its formal feedback.

"The decision to extend a 50% road tax waiver for strong hybrid cars is a timely and progressive step," the IRF said.

CUTS International said in its submission that self-charging hybrids run on electric power for roughly 60% of urban driving. The vehicles reduce carbon dioxide emissions by 25% to 35% without requiring external charging infrastructure.

The Nat Zero Energy Transition Association (NETRA) argued the 50% waiver resolves the anomaly of applying higher taxes to cleaner technologies, without causing a net revenue loss against petrol equivalents.

Including hybrids in the tax exemption signals a phased transition, the Nomura Research Institute said. The firm said the vehicles act as a bridge to curb pollution while public electric vehicle charging networks expand.