EY on Budget 2025: Key amendments proposed in Union Budget 2025 for Auto Sector

The Hon’ble Finance Minister presented the Union Budget 2025 on 01 February 2025 in the Lok Sabha. We bring you the key amendments proposed in Finance Bill 2025 with respect to Auto Sector.

On 1 February 2025, the Hon’ble Finance Minister presented the Union Budget 2025 in the Lok Sabha.  We bring to you our detailed analysis on the tax and policy amendments announced by the Hon’ble Finance Minister in respect of Automative Sector.

Aligned with the Viksit Bharat vision and building on past reforms, Budget 2025 promotes a greener auto ecosystem through tax incentives, funding, and domestic manufacturing support, positioning India as a self-reliant global leader.

The Union Budget 2025 unveils key initiatives for the automative sector, such as budgetary boost for manufacturing, exemption of Basic Customs Duty on a range of critical minerals and components and supporting India Inc by exempting various capital goods fostering growth and self-reliance in manufacturing of Lithium-ion battery for EVs. Some of the key tax reforms are as under:

  • Outlay of ~ INR 7000cr for various Central and State Schemes
  • Custom Duty Rate Rationalization - Now only 8 tariff rates are left in Indian Customs Tariff including zero rate.
  • Inclusion of 35 capital goods in the exemption notification to be used in manufacturing of Lithium-ion battery for EVs
  • Exemption from SWS on 82 tariff lines covering motor-cycles (CTH 8711), Semi-conductor devices (CTH 8541), laboratory chemicals (CTH 9802), electricity meter (CTH 9028) etc Calibration of duties to bolster local production of electronics

This Union Budget 2025-26 is a strategic catalyst, set to elevate sustainable and greener automative sector.


Download: Union Budget 2025 - Auto sector Highlights