Ahmedabad's Automotive Boom: Vehicle Purchases Hit Rs 7,538 Crore in 2025-26
Ahmedabad has showcased its formidable economic clout through a staggering surge in vehicle expenditures. In the financial year 2025-26, residents of the city splurged an impressive Rs 7,538 crore on automobiles, a figure that dramatically overshadows the Rs 4,314 crore allocated to the Gujarat state's ports and transport department for the same period. This remarkable spending spree underscores the city's robust consumer demand and its pivotal role in the regional economy.
Tax Collections Reveal Rising Vehicle Investments
The estimation of this colossal outlay is derived from municipal vehicle tax collections, providing a clear window into the automotive market's vitality. According to Ahmedabad Municipal Corporation (AMC) officials, Amdavadis invested Rs 6,813 crore in vehicles during the preceding year, 2024-25. For 2025-26, the AMC garnered Rs 239.3 crore in vehicle tax from 2.98 lakh vehicles registered at the Subhash Bridge and Vastral Regional Transport Offices (RTOs).
The vehicle tax structure imposed by the AMC varies from 2% to 5% based on the vehicle's cost. Specifically, two-wheelers, autorickshaws, loading rickshaws, four-wheeler loading tempos, and mini trucks are taxed at 2.5% of their basic price. For cars, the tax escalates with value: vehicles priced above Rs 50 lakh attract a 5% levy, while those between Rs 25 lakh and Rs 49.9 lakh incur 4%. This progressive system highlights the city's appetite for higher-value automobiles.
Surge in Registrations and Premium Segment Demand
The current year's tax collection marks an increase of approximately Rs 15 crore compared to the previous year, which saw Rs 224.8 crore collected from 2.6 lakh vehicles. This uptick signals not only a rise in the number of vehicles being registered but also an enhancement in the average value of purchases. RTO officials note that most cars registered in Ahmedabad fall within the 2.7% to 4% tax bracket, indicating base prices ranging from above Rs 8 lakh to Rs 49.9 lakh. This trend points to sustained vigor in the mid-range and premium passenger vehicle segments.
Luxury vehicle registrations have particularly surged, with 4,631 luxury cars recorded in 2025-26, a 7% increase from the 4,333 registered in 2024-25. Officials attribute this growth to factors such as higher ground clearance, stronger road presence, feature-rich models, and readily available loans, which collectively fuel consumer interest in upscale automobiles.
Tax Evasion Challenges and Electric Vehicle Exemptions
Despite the booming sales, tax officials report a significant issue with vehicle owners circumventing AMC taxes by registering their vehicles outside Ahmedabad. Official data excludes vehicles under the GJ-38 series, which covers Bavla, as these do not incur AMC vehicle tax. In 2025-26, about 55,000 vehicles were registered in Bavla, with many believed to be used by Ahmedabad residents who register at addresses in nearby villages to avoid payments.
An RTO officer explained, "For a Rs 35 lakh vehicle, the corporation tax amounts to Rs 1.4 lakh, equivalent to the insurance cost. This motivates some to opt for registration in Bavla." Consequently, the actual number of vehicles purchased by Amdavadis may exceed tax-based estimates, which only consider base values. Buyers also face additional costs like RTO tax and insurance, totaling nearly Rs 5 lakh for a Rs 35 lakh vehicle.
In contrast, electric vehicles (EVs) enjoy a tax exemption in Ahmedabad, with zero vehicle tax levied. This incentive has been extended for the 2026-27 financial year, potentially encouraging further adoption of eco-friendly transportation options amid the city's automotive expansion.
