Synopsis
Karnataka has introduced a new lifetime road tax for electric cars, jeeps, and buses, excluding two-wheelers. This move aims to generate an additional Rs 250 crore for the state government. The decision has drawn criticism from Union Minister Pralhad Joshi and the EV industry, who fear it could increase crude oil imports and hinder climate goals.The cash-strapped government has brought all EVs or battery-operated vehicles under the purview of the road tax, which was earlier applicable only for vehicles priced at or above Rs 25 lakh.
The tax rate depends on the price of the vehicle. The buyer needs to pay 5% of the cost of the vehicle as tax if it is priced under Rs 10 lakh, 8% if priced between Rs 10-25 lakh, and 10% if it is higher than Rs 25 lakh.
For vehicles that are already registered, the owner has to pay between 93% and 25% of the lifetime tax, with the percentage of the levy tapering with age.
The government has levied this tax on EVs by passing the Karnataka Motor Vehicles Taxation (Amendment) Bill, 2026, in March. The regional transport offices (RTOs) will start collecting the taxes with the government notifying the amendment.
Officials said this is purely a measure aimed at generating additional revenues and the government hopes to net an additional Rs 250 crore from this.
The government has sought to levy this tax at a time when many are showing an interest in switching to EVs to deal with the uncertainties caused by war in the Persian Gulf.
Union Minister for New and Renewable Energy Pralhad Joshi and BJP MP Yaduveer Wadiyar protested the levy, cautioning that Karnataka’s move to withdraw road tax exemptions for EVs could raise India’s crude import bill, encourage a shift back to fossil-fuel vehicles, and derail climate targets. The EV industry also resented the move.
The four state-run transport utilities are struggling with delays in the release of subsidies under the government’s Shakti scheme, which offers free rides for women in non-AC buses. The government has budgeted over Rs 5,300 crore for this in FY27.
