Bengaluru: Karnataka government is planning to withdraw 100% road tax exemption currently available to battery-operated cars. The change, however, will not affect electric two-wheelers, which will continue to get tax benefits, The Times of India reported.
The proposal is part of the Karnataka Motor Vehicles Taxation Amendment Bill, 2026, cleared during the recent session of the state legislature. It is now awaiting the governor’s approval before coming into effect.
If approved, the new system will link tax rates to the price of the vehicle. Electric cars costing up to Rs 10 lakh may attract a 5% tax, while those priced between Rs 10 lakh and Rs 25 lakh could face an 8% levy. Vehicles priced above Rs 25 lakh are already taxed at 10%, and no change has been proposed for this category.
Transport Minister Ramalinga Reddy said the tax will apply only to new purchases and will not be imposed on existing vehicle owners.
The move comes as the state government looks to increase revenue to meet rising expenses. Officials estimate that bringing electric cars under the tax net could add about Rs 259 crore annually.
Karnataka had introduced tax exemptions for electric vehicles in 2016 to encourage their use. In 2024, a 10% tax was imposed on high-end electric cars. The latest proposal now aims to extend taxation to all categories of electric cars.
Vehicle dealers have started informing customers about the likely rise in prices, including those who have already booked their cars, as the state prepares for a shift in its electric vehicle policy.
