TL;DR
Karnataka has ended its EV tax exemption, imposing a lifetime tax of 5-8% on new electric cars, which will increase their prices by up to ₹1.6 lakh.
In a significant policy shift, the Karnataka government has announced the end of the 'zero road tax' era for electric cars. The state has passed the Karnataka Motor Vehicles Taxation (Amendment) Bill, 2026, which introduces a mandatory lifetime tax on new battery-operated four-wheelers and buses. This move is aimed at boosting state revenue and is expected to increase the prices of electric cars by ₹40,000 to ₹1.6 lakh, depending on the model.
Under the new tax structure, electric cars priced up to ₹10 lakh will incur a 5% tax, while those between ₹10 lakh and ₹25 lakh will be subject to an 8% tax. Electric cars exceeding ₹25 lakh already carried a 10% road tax. Experts believe this withdrawal of tax exemption could moderate near-term EV adoption momentum, especially in the entry- and mid-segments, as the upfront cost advantage for buyers is significantly reduced. The Transport Minister, however, maintains that strong demand for personal cars in Bengaluru will prevent a deterrent effect on buyers.
