Karnataka Moves to Tax EVs Under New Amendment Bill

The Government of Karnataka has proposed a new tax framework for electric vehicles, signalling a notable shift in policy even as it continues to promote clean mobility adoption.

The proposal is part of the Karnataka Motor Vehicles Taxation Amendment Bill, 2026, which has been passed by the state legislature and is currently awaiting the Governor’s approval before coming into effect.

Under the proposed amendment, newly purchased electric vehicles will attract a one-time lifetime tax. This levy will be linked to the vehicle’s cost, effectively bringing EVs under a structured taxation regime similar to internal combustion engine vehicles. However, two-wheelers will be exempted from this tax.

Vehicle tax rates are based on the purchase price: a 5% levy applies to cars under ₹10 lakh, 8% for those between ₹10-25 lakh, and 10% for vehicles exceeding ₹25 lakh. For previously registered vehicles, owners must pay a lifetime tax ranging from 93% down to 25%, with the rate reducing as the vehicle ages.

The move comes at a time when India is accelerating its transition to electric mobility, driven by environmental priorities and the need to reduce dependence on fossil fuels.

At the same time, global uncertainties, including geopolitical tensions in West Asia, have raised concerns over fuel price volatility. This has, in turn, increased consumer interest in EVs as an alternative.

Also read: India’s Car Sales Jump 8.3% to 4.7 Million in FY26: Here are the Top 5 Performers

The proposed tax presents a mixed outlook for the EV ecosystem. While it may help the state augment revenues and standardise taxation, the added upfront cost could deter some buyers, particularly in the price-sensitive mid-segment.

Industry observers suggest that higher acquisition costs may slow adoption unless offset by incentives or stronger charging infrastructure support.

The amendment will take effect only after receiving the Governor’s assent. Stakeholders across the automotive and clean energy sectors are closely monitoring the development, as it could influence EV pricing and demand trends in Karnataka.