Karnataka to levy lifetime tax on electric cars, withdraw exemption

Cars priced up to Rs 10 lakh will pay 5% while those costing between Rs 10 lakh and Rs 25 lakh will have to fork out 8%.

Bengaluru: Karnataka is set to levy a lifetime tax on all electric cars and buses, withdrawing an exemption introduced to promote cleaner mobility. 

Under the revised structure, the tax will range from 5% to 8% based on the vehicle cost. 

Cars priced up to Rs 10 lakh will pay 5 per cent while those costing between Rs 10 lakh and Rs 25 lakh will have to fork out 8 per cent. Electric cars priced beyond Rs 25 lakh already carry a 10 per cent road tax. 

The move marks a significant policy shift and has sparked concerns over its potential impact on EV adoption. 

Vehicles that are already registered will pay between 93 per cent and 25 per cent of this lifetime tax based on their age. For example, a two-year-old vehicle will pay 93 per cent of the tax while a vehicle that's 15 years or older will pay 25 per cent. 

The new tax will apply to motor cars, jeeps, omnibuses and private service vehicles powered by electricity. Two-wheelers will continue to be exempted. 

To enable taxation, the state has introduced the Karnataka Motor Vehicles Taxation (Amendment) Bill, 2026. The bill has been passed by the Legislative Assembly and will now be taken up by the Legislative Council. 

For EV taxations, the amendment revises provisions under Section 3(1), Part 5(a) of the Karnataka Motor Vehicles Taxation Act, 1957. 

The state has also revised tax rates for other vehicle categories, including motor cabs, commercial tractor-trailers, construction equipment vehicles, vehicles fitted with air compressors and generators, and vehicles mounted with drilling rigs or air compressors with drilling rig units. 

The state expects to generate around Rs 250 crore in revenue from these changes in 2026–27. According to the bill’s statement of objects and reasons, the amendments are aimed at improving tax compliance and reducing defaulters. 

However, the decision has drawn criticism. 

In a letter to the Governor, Sivaram G, a retired State Bank of India employee, termed the move "retrograde", arguing that it runs counter to national efforts to promote electric mobility.

He warned that higher taxes could discourage EV adoption and make it harder for India to meet its climate commitments, including reducing air pollution levels by 50 per cent by 2030. 

Lifetime tax for EVs 

Vehicle cost               Tax rate

Up to Rs 10 lakh          5%

Rs 10–25 lakh             8% 

Above Rs 25 lakh        10%

Conventional vehicles (Floor Area up to 5 m)

Vehicle cost              Tax rate 

Up to Rs 5 lakh            13%

Rs 5–10 lakh               14%

Rs 10–20 lakh             17% 

Above Rs 20 lakh         18%