New Tax Policy in Karnataka Targets High-End Electric Vehicles: Here's All About It

The cost of high-end electric vehicles in Karnataka is poised to rise following the state government's decision to impose a 10 per cent lifetime tax on the vehicle's price at the time of registration.

This new policy will affect electric cars, jeeps, and buses, according to a government notification.

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For the past seven years, Karnataka has exempted electric vehicles (EVs) from taxes across all price segments to encourage the adoption of environmentally friendly transportation.

However, the state government is now revising its stance due to the surge in luxury EV purchases by wealthier individuals.

It is projected that by 2030, Bengaluru will host around 23 lakh electric vehicles, a significant increase from the 80,000 recorded in 2021.

Across the state, the number of electric vehicles has already surpassed 3 lakh.

Initially, there was a proposal to impose a lifetime tax on vehicles priced over Rs 20 lakh, but this threshold has been adjusted to vehicles costing more than Rs 25 lakh after receiving the state government's approval.

After receiving consent from the governor, the Karnataka Motor Vehicles Taxation (Amendment) Act was published in the special state gazette, paving the way for the implementation of this tax, Economic Times reported.

The amendment also affects petrol and diesel vehicles, particularly transport and commercial ones, which will now incur higher registration fees.

A 3 per cent cess has been introduced on the transport vehicles to create a fund dedicated to the welfare of drivers and transport workers.

The Act states, "In addition to the existing cess of the tax levied under Section 3 on motor vehicles registered under Motor Vehicles Act, 1988 (Central Act 59 of 1988), three percent additional cess shall be levied and collected on transport vehicles for the purpose of Karnataka Motor Transport and Other Allied Workers Social Security and Welfare Fund."

This move is expected to generate around Rs 100 crore annually, which will be allocated to social security and welfare programs for workers in the informal sector.

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