Buying Electric Cars in Karnataka is No Longer Profitable
Tax exemptions for electric vehicles come to an end: New Lifetime Tax for all electric car owners.
New Tax Rates:
* Vehicles up to ₹10 Lakh: 5% of the vehicle price.
* Vehicles between ₹10 Lakh and ₹25 Lakh: 8% of the vehicle price.
* Vehicles above ₹25 Lakh: The existing 10% tax will continue.
Even previously registered vehicles have not been spared as the earlier tax exemptions are scrapped. Lifetime tax slabs have been introduced for currently registered vehicles as well. For vehicles up to two years old, the tax is set at 93% of the new vehicle tax, while for vehicles older than 15 years, it is 25%.
Popular models like the Tata Nexon, MG Windsor, Mahindra BE 6, XEV 9E, Hyundai Creta EV, and Maruti Suzuki eVitara are mostly priced above ₹10 lakh, meaning owners will have to pay 8% tax. If top variants exceed ₹25 lakh, the tax jumps to 10%.
For a car priced at ₹20 lakh, a new tax of ₹1.60 lakh must be paid. This makes buying an electric car in Karnataka significantly less attractive. There is now very little difference compared to the taxes levied on standard petrol and diesel cars. Considering the challenges of charging time and the higher initial purchase price of EVs, people may now hesitate to buy them.
Government Justification
The government states that the tax hike is part of an effort to collect an additional ₹250 crore this financial year, following a ₹1,000 crore shortfall in motor vehicle tax revenue compared to targets last year. The bill clarifies that ₹250 crore can be raised from various categories of electric vehicles registered in the 2026-27 period. The bill is currently awaiting the Governor's approval.
This move comes at a time when fuel supplies to India are facing disruptions due to conflicts in West Asia.
Refund Policy
The bill also specifies that if the Karnataka registration is cancelled within one year, 93% of the paid tax will be refunded. If cancelled after 14–15 years, the refund amount will be 25%.
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