Karnataka to enforce lifetime tax on all electric cars despite growing opposition

The Karnataka transport department will begin collecting lifetime tax on all electric car variants within the next 15 days. This decision comes despite strong opposition from political parties and industry stakeholders. Officials confirmed that technical changes are underway on the Vahan portal to facilitate tax collection.

Key Highlights

• Karnataka to collect lifetime tax on all electric car variants within 15 days
• Tax rates range from 5 percent to 10 percent based on vehicle price slabs
• The state expects to generate around Rs 249 crore in revenue from the new tax
• Opposition and manufacturers warn the tax could slow electric vehicle adoption

New Lifetime Tax Structure for EVs

Under the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026, all electric vehicles will incur a lifetime road tax at registration. The tax rate will depend on the vehicle's price. Cars priced up to Rs 10 lakh will be taxed at 5 percent. Vehicles between Rs 10 lakh and Rs 25 lakh will face an 8 percent tax. Electric cars costing above Rs 25 lakh will attract a 10 percent tax.

The state government expects to generate approximately Rs 49 crore in revenue from this measure. Since 2016, Karnataka has exempted electric vehicles from lifetime tax to encourage green mobility. In 2024, the government began taxing electric cars priced above Rs 25 lakh at 10 percent. The new proposal expands the tax to all electric car segments.

Reactions and Industry Concerns

The move has drawn criticism from the opposition. The Bharatiya Janata Party (BJP) described the tax as regressive and warned it could slow electric vehicle adoption. Bangalore South MP Tejasvi Surya wrote to the chief minister, stating the policy contradicts national efforts to promote electric mobility. He referenced central schemes like FAME India and PM E-Drive, which aim to boost EV adoption.

Surya argued that the tax could discourage consumers and hinder the growth of the electric vehicle ecosystem in Karnataka. He noted that other states, such as Delhi, offer full road tax waivers for electric cars costing below Rs 30 lakh. He said Karnataka's approach may deter buyers and reduce the state's competitiveness in the EV sector.

Electric car manufacturers have also expressed concern. They have urged the government to reconsider the tax, warning it could slow the transition to cleaner mobility options. Industry representatives believe the tax could reduce demand for electric vehicles and impact the state's environmental goals.

The rollout of the new tax structure is expected soon, with technical updates to the Vahan portal nearing completion. The government maintains that the measure will increase revenue and support infrastructure development.

Also Read: Delhi’s new EV two-wheeler policy: Incentives announced, full electric shift by 2028

CarBike 360 Says

​Despite widespread resistance from EV manufacturers and green advocates, Karnataka’s lifetime tax decision signals a complex balance between revenue generation and sustainability. While the move could initially dampen the state’s EV market, its long-term effects on adoption and consumer sentiment will determine whether Karnataka remains a leader or loses momentum in India’s electric mobility transition.