Karnataka to Impose Additional Levies on Electric Vehicles

Karnataka to End 100 Percent Road Tax Exemption for Electric Vehicles

The Karnataka government is set to end the 100 percent road tax exemption for battery-operated vehicles (BOVs), including cars, jeeps, omni buses, and private service vehicles running on electricity. The state government plans to link the lifetime tax at the time of registration to the cost of the vehicle, as per the Karnataka Motor Vehicles Taxation (Amendment) Bill, 2026, which has been passed by the legislature.

Under the new tax structure, electric vehicles (EVs) priced up to Rs 10 lakh will attract a 5 percent tax, while those between Rs 10 lakh and Rs 25 lakh will be taxed at 8 percent. Vehicles above Rs 25 lakh will attract a 10 percent tax. The new levy will come into force after receiving the Governor's assent, following which it will be notified.

Karnataka has been exempting all EVs from road tax since March 2016 to promote adoption. The rollback marks a significant policy shift, especially at a time when many vehicle owners are considering a transition to electric mobility amid rising fuel costs linked to global geopolitical tensions.

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The move has raised concerns among EV manufacturers and prospective buyers, with industry stakeholders warning that higher upfront costs could slow adoption and impact the state's EV growth momentum. Karnataka is the fourth-largest vehicle market in India after Uttar Pradesh, Maharashtra, and Tamil Nadu, in terms of registrations.

The amendment also proposes a reduction in the per-seat tax for contract carriage buses and sleeper coaches to encourage more operators to register their vehicles within Karnataka. Under the revised structure, contract carriage vehicles with more than 12 seats will be taxed at Rs 2,500 per seat, down from Rs 3,500, while sleeper coaches will attract Rs 3,000 per berth compared to the earlier Rs 4,000.

Lower Taxes for Bus Operators

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The revised tax structure is expected to ease the burden on bus operators and encourage more of them to register their vehicles within Karnataka. K Radhakrishna Holla, president of Karnataka State Travels Owners Association, welcomed the government's decision to reduce road tax for tourist buses and sleeper coaches, saying it will improve the overall business environment and support the tourism and transport sectors.