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Karnataka EVs Face New Tax Reality
2 Apr
Summary
- Karnataka plans to reintroduce road tax on electric cars.
- New tax slabs range from 5% to 10% based on vehicle price.
- The state aims to generate ₹259 crore annually from EV taxes.
Karnataka is preparing to reintroduce road tax on battery-operated cars, marking a significant policy shift from its previous incentives for electric mobility. The Karnataka Motor Vehicles Taxation Amendment Bill, 2026, recently cleared by the legislative assembly and awaiting the governor's approval, proposes new tax structures for electric vehicles.
Under the revised framework, electric cars priced up to Rs 10 lakh may incur a 5% tax, while those between Rs 10 lakh and Rs 25 lakh could be taxed at 8%. Vehicles exceeding Rs 25 lakh will continue to be taxed at 10%. This change, affecting the one-time lifetime tax at purchase, is projected to generate about ₹259 crore annually for the state.
This recalibration contrasts with Karnataka's earlier pro-EV stance, including exemptions introduced in 2016 and a 10% tax on luxury EVs in May 2024. The government aims to strengthen its revenue base, with the transport department targeting ₹15,500 crore for FY 2026-27. While electric cars face these new levies, electric two-wheelers are anticipated to remain exempt.
