Rising registrations push the state to move from incentives toward a sustainable taxation framework.
Karnataka has announced a significant shift in its electric vehicle (EV) policy, introducing road tax on select electric cars after years of offering full exemptions to accelerate adoption. The move signals a transition from subsidy-led growth toward a more revenue-balanced electric mobility framework.
From April 2026, electric cars priced above ₹25 lakh will attract a 10% road tax, while vehicles costing between ₹15 lakh and ₹25 lakh will face a 5% levy. EVs priced below ₹15 lakh will continue to remain exempt, indicating the government’s focus on protecting affordable segments while withdrawing incentives from premium models.
Karnataka has been one of India’s leading EV markets, with registrations rising steadily, particularly in Bengaluru. Officials said the earlier tax waiver successfully encouraged adoption but had become financially unsustainable as EV volumes increased. Motor vehicle tax remains a key source of state revenue, prompting policymakers to recalibrate incentives as the market matures.
The revised structure aims to redirect policy support toward mass adoption rather than luxury vehicles. Industry observers note that premium electric cars have seen faster growth in recent years, leading authorities to reassess benefits originally designed to kickstart the EV ecosystem.
While some industry stakeholders warn that higher upfront costs could moderate demand for high-end electric cars, the government believes the impact on overall electrification will remain limited. Entry-level EVs and electric two-wheelers—which account for a significant share of adoption—will continue to benefit from exemptions.
The state has reiterated its commitment to expanding charging infrastructure and strengthening the broader e-mobility ecosystem through continued investments and policy support. Officials argue that the new taxation model reflects a natural evolution of the market, balancing fiscal sustainability with long-term environmental objectives.
The policy marks Karnataka’s shift toward a more mature EV strategy, where incentives become targeted while clean mobility growth continues.
