High-end EVs to cost more in Karnataka

11 Mar 2024 CW Team

Karnataka has been giving tax exemption for EVs for the last seven years, irrespective of the price range, to promote eco-friendly mobility systems. However, the government is now rethinking its policy in view of the increasing number of luxury EVs which are being brought by the affluent people.

The government estimates that by 2030, there will be around 23 lakh electric vehicles in Bengaluru alone, compared to the 80,000 currently in circulation 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 costing above Rs 20 lakh, but with the approval of the state government, the threshold has been revised to above Rs 25 lakh. 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.

Apart from electric vehicles, petrol and diesel-driven transport and commercial vehicles will also face increased costs for registration. The amendment to the Act introduces a 3% cess on transport vehicles, with the aim of generating a fund for the welfare of drivers and other workers in the transport sector.

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."

The prices of high-end electric vehicles in Karnataka are set to increase as the state government has decided to collect a lifetime tax of 10% of the vehicle's cost at the time of registration. The new rule will apply to electric cars, jeeps, and buses, the government said in a notification. Karnataka has been giving tax exemption for EVs for the last seven years, irrespective of the price range, to promote eco-friendly mobility systems. However, the government is now rethinking its policy in view of the increasing number of luxury EVs which are being brought by the affluent people. The government estimates that by 2030, there will be around 23 lakh electric vehicles in Bengaluru alone, compared to the 80,000 currently in circulation 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 costing above Rs 20 lakh, but with the approval of the state government, the threshold has been revised to above Rs 25 lakh. 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. Apart from electric vehicles, petrol and diesel-driven transport and commercial vehicles will also face increased costs for registration. The amendment to the Act introduces a 3% cess on transport vehicles, with the aim of generating a fund for the welfare of drivers and other workers in the transport sector. 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.

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