Bengaluru: The Karnataka government has decided to move ahead with its proposal to levy a lifetime road tax on electric vehicles (EVs), despite strong opposition from political parties and industry stakeholders who have raised concerns over its potential impact on EV adoption.
According to officials, the decision is part of the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026, which introduces a one-time lifetime tax at the time of vehicle registration for electric vehicles across multiple segments.
Tax structure under the new policy
The revised taxation framework proposes the following structure:
- 5% tax on electric vehicles priced up to ₹10 lakh
- 8% tax on EVs priced between ₹10 lakh and ₹25 lakh
- 10% tax on electric vehicles priced above ₹25 lakh
The tax will apply to electric cars, jeeps, buses, and other private electric vehicles. However, electric two-wheelers will remain exempt from the proposed levy.
Implementation timeline and revenue expectations
Officials from the Transport Department have confirmed that necessary technical modifications are underway in the VAHAN vehicle registration system to enable implementation of the new tax structure. The revised system is expected to be operational within the next 15 days.
The state government anticipates generating approximately ₹249–₹259 crore in additional revenue through the new taxation measure.
Background of EV taxation in Karnataka
Karnataka has been considered one of the early adopters of electric mobility incentives in India. Since 2016, the state had extended full road tax exemption on EVs to encourage adoption and promote sustainable transportation.
In 2024, the government introduced taxation on luxury EVs priced above ₹25 lakh. The latest amendment expands the tax net to include a broader range of electric vehicles, marking a significant policy shift.
Political and industry response
The decision has drawn criticism from opposition parties, particularly the BJP, which has termed the move “regressive” and counterproductive to the state’s clean mobility goals.
Industry stakeholders and EV manufacturers have also expressed concerns that the additional tax burden may slow down EV adoption and impact consumer demand, particularly in price-sensitive segments.
Government’s justification
State officials have defended the decision, stating that the revised tax structure is necessary to:
- Strengthen state revenue collections
- Ensure uniform taxation across vehicle categories
- Support fiscal requirements under transport infrastructure funding
They further added that the policy seeks to balance the promotion of electric mobility with the state’s long-term financial sustainability.
Broader implications
The move has sparked a wider policy debate on EV taxation in India, with several states continuing to offer incentives and exemptions to accelerate electric vehicle adoption. Karnataka’s decision marks a shift toward partial normalization of EV taxation, potentially influencing other states to reassess their own fiscal policies on electric mobility.
