Friday, May 01, 2026
By Kamal Swami
Karnataka Ends E-Car Tax Exemption, New Slabs Announced
The Karnataka government has officially withdrawn the tax exemption on electric cars and has introduced the revised vehicle taxation rules under the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026. The new taxation policy is effective from May 1, 2026. As a part of a new policy, electric car owners who were earlier exempted from road tax will now attract a lifetime tax based on their price. Vehicles priced up to Rs10 lakh will be taxed at 5%, while those costing between Rs 10 lakh and Rs 25 lakh will attract 8% tax. Electric cars priced above Rs25 lakh already continue to incur a 10% tax.
The revised taxation policy will be applicable to electric motor cars, jeeps, omnibuses, and private service vehicles. As far as electric two-wheelers are concerned, they will continue to enjoy full tax exemption, and existing electric car owners will not be affected by the new rules, according to the state government. Apart from these changes in EV taxation, the government has also reduced tax rates for luxury buses and sleeper coaches. Luxury buses carrying more than 12 passengers will now pay Rs2,500 per passenger per quarter, down from Rs3,500. Similarly, sleeper coaches will be taxed at Rs3,000 per passenger per quarter, compared to the earlier Rs4,150.
It is believed that this exemption will provide a suitable solution to the issues raised by private transport operators regarding high taxation, especially for vehicles operating under All India Tourist Permits (AITPs). Industry experts believe that the reduced rates could encourage operators who had registered vehicles in low-tax states to return to Karnataka.
The state government is also introducing new taxation categories for certain contract carriage vehicles and revising rates for commercial and construction-related vehicles. Officials estimate that these changes could generate around Rs250 crore in revenue during the 2026–27 financial year. While the policy marks a shift from incentives to taxation in the electric vehicle segment, it aims to balance revenue generation with support for the transport sector through rationalised tax structures.
