Karnataka: From today, e-car tax exemption ends; lower rates for luxury & sleeper buses

Bengaluru: The Karnataka Motor Vehicles Taxation (Amendment) Act, 2026, which levies lifetime tax on all electric cars and reduces tax for luxury buses, sleeper coaches and other vehicles, will come into effect on May 1, according to the state government. 

The amendment ends the exemption for electric cars priced up to Rs 25 lakh. Cars priced up to Rs 10 lakh will pay 5% while those costing between Rs 10 lakh and Rs 25 lakh will pay 8%. Electric cars priced above Rs 25 lakh already carry a 10% road tax. 

The new policy will apply to motor cars, jeeps, omnibuses and private service vehicles powered by electricity. Two-wheelers will continue to be exempted. Existing e-cars will also remain exempt, Transport Minister Ramalinga Reddy said. 

Electric motor cabs (other than those registered outside Karnataka) will pay 5% (priced at up to Rs 10 lakh), 8% (Rs 10-25 lakh) and 10% (priced above Rs 25 lakh). 

Conventional vehicles with a floor area of up to 5 sqm will pay 13% (priced up to Rs 5 lakh), 14% (Rs 5-10 lakh, 17% (Rs 10–20 lakh) and 18% (above Rs 20 lakh). 

Conventional motor cabs (other than those registered outside Karnataka) pay 5% (up to Rs 10 lakh), 9% (Rs 10-15 lakh), 15% (above Rs 15 lakh). 

Contract carriage vehicles carrying 12-20 passengers will pay Rs 1,500 per passenger per quarter. “This is a new category and covers vehicles recently introduced to the market,” said S Nataraj Sharma, president of the Federation Of Karnataka State Private Transport Associations. 

Contract carriage vehicles (semi-luxury buses without pushback seats) carrying 20-50 passengers (49+1) will pay Rs 1,500 per passenger per quarter. 

Concerned addressed

The state has addressed private operators’ concerns about high tax rates for vehicles with All India Tourist Permits (AITPs). Luxury buses carrying more than 12 passengers will pay Rs 2,500 per passenger per quarter, compared to Rs 3,500 earlier. 

Similarly, sleeper coaches carrying more than 12 passengers will pay Rs 3,000 per passenger per quarter, compared to Rs 4,150 earlier. 

Sharma hoped the reduced tax rates would encourage AITP holders to register their vehicles within Karnataka. “In recent years, at least 4,000 owners have registered their vehicles in states like Arunachal Pradesh, Nagaland Goa where tax rates were low. The low tax rates should encourage them to come back to Karnataka,” he told DH. 

However, he pointed out that the state can reap the full benefits of the new tax rates only with strict enforcement. “Some RTO officials get monthly bribes from vehicle owners and do not collect taxes from them,” he stated. 

He asked citizens booking educational tours to not fall into the trap of agents and verify whether tax details align with the new rates. 

The state has also revised tax rates for commercial tractor-trailers, construction equipment vehicles, those fitted with air compressors and generators, and vehicles mounted with drilling rigs or mounted with air compressor with drilling rig unit vehicles. 

The state expects around Rs 250 crore from these changes in 2026–27.