Karnataka Ends EV Tax Breaks for Cars, Buses

The Karnataka government has revoked tax exemptions for electric vehicles, enacting the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026. This move brings EVs under a lifetime road tax structure, a departure from previous incentives.

The new regulations, however, will not affect electric two-wheelers, which will continue to be exempt. Other EVs, including cars, jeeps, and buses, will now be subject to a tax determined by their purchase price at the time of registration. Vehicles priced under ₹10 Lakh will be taxed at 5%, those between ₹10-25 Lakh at 8%, and EVs above ₹25 Lakh at 10%.

Prior to this amendment, all EVs in Karnataka enjoyed a 100% road tax exemption, initially introduced in 2016 to encourage EV adoption. For pre-registered vehicles, the tax demand will range from 93% to 25% of the total lifetime tax, decreasing with the vehicle’s age. The government anticipates generating approximately ₹250 Cr in additional revenue through this measure.

Several electric car manufacturers had appealed to Karnataka’s chief minister, Siddaramaiah, for relief from the taxation, citing concerns that increased costs would hinder EV adoption relative to internal combustion engine (ICE) vehicles.

Despite these concerns, EV adoption in India has been increasing, spurred by factors such as fuel shortages and rising prices. In March, EV registrations rose 46% month-on-month, reaching nearly 2.8 Lakh units.