Karnataka Ends EV Tax Incentives for Models Above INR 25 Lakh

The Karnataka Government has rolled out a new lifetime tax policy for electric vehicles (EV), moving away from the previous model that required annual payments.

The state has introduced a one-time lifetime tax system under the updated Karnataka Motor Vehicles Taxation Act of 2025.

Those electric and hybrid vehicles priced under INR 25 lakh won’t have to pay road tax. The government is aiming to secure INR 50,000 crore in investments in clean mobility by 2029.

To boost clean transportation over the next five years in the state, Karnataka began working on a new EV policy in 2024. Attractive incentives were planned for both buyers and manufacturers to make Karnataka a top place for EV production.

Under the new Karnataka lifetime tax system, vehicles under the price bracket of INR 10 lakh will now be subject to a one-time five percent lifetime tax, replacing the former annual tax of INR 1,800. Those vehicles priced between INR 10 lakh and INR 15 lakh will have to pay a one-time nine percent lifetime tax. Vehicles over INR 15 lakh will have to pay a 15 percent lifetime tax. However, in the updated tax structure vehicles priced over INR 25 lakh will have to pay a 10 percent lifetime tax those were exempted.  

Motor cabs that costs upto INR 10 lakh will have to pay a lifetime tax of 10 percent. Those cabs that costs between INR 10 lakh and INR 15 lakh will have to pay a nine percent lifetime tax. 15 percent lifetime tax to be paid by cabs that costs INR 15 lakh. Electric motor cabs that exceed INR 25 lakh will have to pay a lifetime tax of 10 percent. These tax slabs apply only to vehicles registered within Karnataka and do not impact those operating under permits issued outside the state, according to Section 88(9) of the Motor Vehicles Act, 1988.

The lifetime tax slab for these vehicles will start at eight percent and may go up to 25 percent for vehicles older than 15 years. The tax slab for these vehicles will be determined based on their age.

When a motor cab is deregistered, the refund amount depends on how old the vehicle is. If the cab is deregistered within the first year, you'll get back 93 percent of its value. For cabs between 14 and 15 years old, the refund will be 25 percent.