What Changes for Car Owners From April 1, 2026 — Tolls, Insurance, ABS & More

April 1 is not just the start of a new financial year — it is the date when a batch of regulatory changes kick in that directly affect every car and bike owner in India. From higher toll rates on national highways to the end of electric car subsidies, from mandatory ABS on all two-wheelers to updated insurance premiums, FY 2026-27 brings several changes that will impact your wallet, your commute, and your next vehicle purchase decision. This guide covers every change you need to know, with practical advice on what to do before and after the deadline.

Quick Summary — All Changes at a Glance

Before diving into the details, here is the full list of changes taking effect from April 1, 2026. Bookmark this table for quick reference.

Toll Rate Hike — 5% Across Highways

The National Highways Authority of India (NHAI) revises toll rates annually on April 1 in line with inflation as measured by the Wholesale Price Index (WPI). For FY 2026-27, the revision is approximately 5% across all toll plazas on national highways. This is a standard annual adjustment — not a one-time or exceptional hike — and it applies uniformly across all vehicle categories.

To put that in practical terms: if you currently pay ₹100 at a toll plaza for a single journey in your car, you will pay ₹105 from April 1. For a monthly return-trip highway commuter covering, say, 4 toll plazas each way, the annual increase works out to roughly ₹2,400–3,600 more per year depending on the specific toll rates on your route. That is not insignificant for daily highway commuters travelling between satellite cities — think Gurugram to Delhi, Pune to Mumbai, or Bengaluru to Mysuru.

The toll hike also affects commercial vehicles, which means transport costs for goods will edge upward. This has a downstream effect on vehicle servicing and spare parts costs over time, as logistics costs are eventually passed on to consumers.

FASTag Goes Fully Cashless

This is arguably the most operationally significant change for drivers who have been dragging their feet on FASTag adoption. From April 1, 2026, cash payments will be completely discontinued at all NHAI toll plazas. The only accepted payment methods will be FASTag (linked to your bank account and affixed to your windshield) and UPI-based toll payments.

FASTag has been mandatory since February 2021, but in practice, many toll plazas continued to operate hybrid cash-plus-FASTag lanes to manage transition challenges. That grace period is now over. Vehicles arriving at a toll plaza without a valid, activated FASTag will be charged double the toll fee — a penalty designed to push full compliance.

The FASTag annual pass price has also been revised upward from ₹3,000 to ₹3,075, reflecting the 5% toll rate increase applied to the flat annual rate. For frequent highway users, the annual pass remains excellent value — it pays for itself after approximately 30-35 single-direction trips on most highway stretches, versus paying per-trip FASTag charges.

ABS Now Mandatory on All Two-Wheelers

This is a major safety regulation change. From April 1, 2026, Anti-lock Braking System (ABS) is mandatory on all new two-wheelers sold in India, regardless of engine displacement. Previously, the rule under the Motor Vehicle Safety Standards (MVSS) only required ABS on two-wheelers with engine capacity above 125cc. Smaller bikes and scooters — which make up the vast majority of two-wheeler sales in India — were only required to have CBS (Combined Braking System), a simpler and cheaper technology.

The new mandate means that even entry-level scooters like the Honda Activa, TVS Jupiter, and Suzuki Access, as well as commuter motorcycles like the Hero Splendor and Bajaj Platina, will now come equipped with ABS on all new units manufactured from April 1 onward. Existing models already in dealer stock with CBS can still be sold, but no new CBS-only models can be manufactured after the deadline.

ABS prevents wheel lock-up during hard braking, significantly reducing the risk of skids on wet or loose surfaces. India's two-wheeler fatality rate is among the highest in the world, and ABS has been shown to reduce fatal crashes by 31% according to studies by the Insurance Institute for Highway Safety (IIHS). The cost of ABS typically adds ₹3,000–8,000 to the sticker price of a two-wheeler depending on the system type (single-channel vs dual-channel) and vehicle segment.

For used two-wheeler buyers, this creates an important consideration. Older models without ABS will see a widening gap in perceived safety compared to new ABS-equipped models. This may put downward pressure on resale values of pre-ABS two-wheelers over the next 2-3 years, particularly in the sub-125cc segment where CBS was the norm.

PM E-DRIVE Subsidy — What's Still Available

The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, launched by the Government of India as a successor to the FAME-II programme, has been providing subsidies to make electric vehicles more affordable. However, the subsidy landscape is splitting in two directions as of April 1, 2026.

Electric cars: The PM E-DRIVE subsidy for electric cars — which offered up to ₹50,000 per vehicle — has ended as of March 31, 2026. The allocated budget for the four-wheeler segment has been fully utilised, and no extension has been announced. This means that if you were planning to buy an electric car like the Tata Nexon EV, MG ZS EV, or Mahindra XEV 9e, the subsidy window has closed. The effective on-road price of electric cars will increase by ₹25,000–50,000 depending on the model and state.

Electric two-wheelers: The subsidy for electric scooters and bikes has been extended until July 2026, offering up to ₹5,000 per vehicle. This extension was driven by the government's push to electrify the massive two-wheeler segment, which accounts for over 75% of all vehicles on Indian roads. Brands like Ola Electric, Ather Energy, TVS, and Bajaj continue to benefit from this subsidy, and buyers have until July to take advantage of the reduced pricing.

Insurance & Registration Updates

Every new financial year brings revised third-party insurance premiums set by the Insurance Regulatory and Development Authority of India (IRDAI). Third-party insurance is mandatory for all vehicles in India, and the premium rates are standardised across insurers — you cannot negotiate them. While the exact FY 2026-27 rates are typically notified in late March or early April, industry expectations suggest a modest increase of 3-8% for most vehicle categories based on claims data from the previous year.

For context, a typical third-party premium for a private car (up to 1,000cc) was approximately ₹2,094 in FY 2025-26. A 5% increase would take it to roughly ₹2,200. For cars above 1,500cc, the current premium of approximately ₹7,890 could rise to around ₹8,280. These are not large absolute numbers, but they add up across the lifetime of vehicle ownership.

Comprehensive insurance premiums (own damage + third party) are market-driven and vary by insurer, so they do not change on a fixed date. However, insurers often recalibrate their own-damage rates at the start of the fiscal year. If your policy is up for renewal in April or May, it is worth getting quotes from multiple insurers through aggregator platforms before April 1 to lock in current-year rates where possible.

On the registration front, the new fiscal year means RTOs across India will start issuing new registration number series. Some states also revise road tax rates at the start of the fiscal year — Maharashtra, for example, has historically adjusted its one-time road tax for new vehicle registrations. If you are buying a new car and your state is expected to hike road tax, registering before April 1 could save you a few thousand rupees.

What This Means for Used Car Buyers and Sellers

These regulatory changes have direct and indirect implications for the used vehicle market. If you are buying or selling a used car in the coming months, here is how each change affects you.

Higher running costs push buyers toward fuel-efficient cars. The 5% toll hike and potential insurance premium increases mean that the total cost of ownership (TCO) for any vehicle goes up. For used car buyers, this strengthens the case for fuel-efficient hatchbacks and CNG-equipped vehicles. Models like the Maruti WagonR, Maruti Swift, and Hyundai Grand i10 Nios — which offer 20-25 kmpl petrol and 28-32 km/kg CNG — become more attractive when recurring costs are rising.

Used EV prices may soften. With the PM E-DRIVE car subsidy ending, new electric car prices will effectively rise by ₹25,000-50,000. Paradoxically, this could put downward pressure on used EV prices in the short term, as some buyers who were on the fence about new EVs will now look at used alternatives more seriously, while new EV sales slow slightly. If you have been considering a used Tata Nexon EV or MG ZS EV, the next 2-3 months could present better deals as the market adjusts.

FASTag compliance matters for used car sales. If you are selling a used car, ensure the FASTag linked to the vehicle is properly transferred or deactivated. Buyers increasingly check FASTag status as part of their pre-purchase inspection. A car with no FASTag or an inactive FASTag is a minor hassle for the buyer, but it signals that the vehicle may not have been used on highways recently — which some buyers interpret as a sign of limited long-distance use.

Insurance history affects resale value. A vehicle with a clean insurance claims history and active comprehensive cover commands a premium in the used market. If you are selling, having a valid insurance policy (not just expired third-party cover) is a strong selling point. On VahanBazaar, verified listings with documented insurance status attract more buyer enquiries.

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