The Karnataka government has ended the tax exemption for electric cars priced up to Rs 25 lakh, effective from today. The amendment introduces lower tax rates for luxury and sleeper buses as well.
New Tax Structure for Electric Cars
Under the revised policy, electric cars priced up to Rs 10 lakh will now attract a 5% tax, while those costing between Rs 10 lakh and Rs 25 lakh will be taxed at 8%. Previously, these vehicles enjoyed a full exemption from road tax and registration fees. The move is aimed at generating additional revenue for the state and aligning with the phasing out of EV incentives.
Impact on Consumers
The tax change is expected to increase the upfront cost of electric cars, potentially slowing adoption. However, the government has retained lower tax rates for luxury and sleeper buses to promote public transport. Industry experts believe this could shift consumer preference towards more affordable EV models or delay purchases.
Background
Karnataka had introduced the tax exemption in 2020 to boost electric vehicle sales. With the EV market maturing, the state decided to withdraw the benefit. The amendment was published on 30 April 2026 and takes immediate effect.
For more updates on Karnataka's EV policies and tax changes, follow our coverage.
