EVs Above ₹25 Lakh to Face 10% Lifetime Tax in Karnataka

The Karnataka government has introduced sweeping changes to its motor vehicle taxation policy. As per the newly amended Karnataka Motor Vehicles Taxation Act, 2025, the state has scrapped the annual tax system and implemented a one-time lifetime tax structure for all vehicles. While the new policy offers relief from yearly payments, it could increase the tax burden on high-end and electric vehicles.

Under the revised system, vehicles priced up to ₹10 lakh will be taxed at 5%, those between ₹10–15 lakh at 9%, and vehicles above ₹15 lakh will incur a 15% lifetime tax. Electric vehicles costing over ₹25 lakh, which were previously exempt from road tax, will now face a 10% lifetime tax. This marks a significant shift from the state’s earlier pro-EV stance.

The government has also removed the clause that imposed higher taxes on vehicles costing more than ₹10 lakh, which may provide relief for premium car buyers. For construction equipment vehicles, the tax now varies by vehicle age—starting at 8% for new vehicles and rising to 25% for those older than 15 years. Motor cabs registered in Karnataka will also follow the new tax slabs.

These changes apply only to vehicles registered in Karnataka and exclude those operating under permits issued by other states. A refund policy has been introduced for deregistered vehicles based on age. While last year’s draft EV policy offered tax exemptions for electric vehicles under ₹25 lakh, this new move shows the government is now balancing revenue generation with its clean mobility goals.