Karnataka Scraps Tax Breaks For EVs, Two-Wheelers Exempted

The Karnataka Motor Vehicles Taxation (Amendment) Act, 2026 will affect EVs like cars, jeeps, buses and other private vehicles

Under the tax structure, the lifetime tax structure will be determined by the cost of the vehicle at the time of purchase

EV adoption in the country has witnessed increased momentum in recent months, especially with the West Asian war causing fuel shortages

The Karnataka government has notified the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026, formally bringing electric vehicles under a lifetime road tax structure that the sector was earlier exempted from.

The amendment will affect EVs like cars, jeeps, buses and other private vehicles, while two-wheelers will continue to enjoy an exemption.

Under the tax structure, the lifetime tax structure will be determined by the cost of the vehicle at the time of purchase and needs to be paid at the time of registration. If the EV is priced under ₹10 Lakh, the buyer will need to pay a 5% tax. If the vehicle is priced between ₹10-25 Lakh, it will be taxed at 8%. For vehicles about ₹25 Lakh, the tax liability will be at 10%. All EVs enjoyed a 100% road tax exemption in the state prior to the amendment.
For pre-registered vehicles, the tax demand will range from 93% to 25% of the total lifetime tax, with the levy decreasing with the vehicle’s age.
The move is aimed at generating an extra revenue of about ₹250 Cr for the state government.

Earlier, several electric car OEMs had written to Karnataka chief minister Siddaramaiah seeking relief from the taxation, especially as EV penetration still remains nascent and additional tax demands will make them costlier than ICE counterparts.

The exemptions were first introduced in 2016 to aid adoption of electric vehicles in the state.

Notably, EV adoption in the country has witnessed increased momentum in recent months, especially with the West Asian war causing fuel shortages and fears of price hikes, making the switch to EVs more cost-effective. In March, total EV registrations in the country rose 46% month-on-month to almost 2.8 Lakh units.