Karnataka Govt Ends EV Tax Exemptions; Two-Wheelers Remain Unaffected

The state of Karnataka has reportedly ended the Road Tax Exemption for Electric Vehicles through the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026. The notification was issued on 10 April, following the Governor’s approval a day earlier. 

The change brings electric cars, jeeps, omni buses and private service vehicles under a lifetime tax system. Electric 2-wheelers continue to remain exempt. 

Tax Rates Based on Vehicle Price 

The revised structure links tax to the vehicle’s cost at the time of purchase. Electric vehicles priced up to ₹10 lakh will attract a 5% lifetime tax. 

Vehicles in the ₹10 lakh to ₹25 lakh range will be taxed at 8%, while those above ₹25 lakh will face a 10% levy. Earlier, battery-operated vehicles were fully exempt, except for certain higher-value categories. 

Rules for Re-Registered Vehicles 

An age-based tax applies to vehicles brought into Karnataka from other states and registered again. The tax demand ranges between 93% and 25% of the lifetime tax amount. 

The payable amount reduces as the vehicle gets older. The provision does not apply to vehicles already registered within the state. 

Revenue Impact and Policy Change 

The state expects to collect around ₹250 crore through the revised tax system. Motor vehicle tax is a significant source of revenue, with Karnataka already levying 13% to 18% on petrol and diesel vehicles. 

The earlier exemption was introduced in 2016 to encourage electric vehicle adoption. The amendment is a shift away from that approach. 

Registration Activity Before Implementation 

Data from the Vahan portal shows a rise in electric vehicle registrations ahead of the change. Registrations increased from 3,972 units in January to 4,663 units in March. 

Dealers had indicated possible price increases, leading some buyers to complete purchases before the new tax came into effect. 

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Conclusion 

The new framework brings electric vehicles into the tax system while retaining relief for 2-wheelers, changing the state’s earlier incentive-based policy. 

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