Karnataka government may end 100% road tax exemption for EVs

BENGALURU: In a move that could affect electric vehicle (EV) adoption in Karnataka, the transport department is mulling ending 100% road tax exemption given to battery-run vehicles. If approved, EVs will be costlier in the state.
Sources in the transport department said discussions are going on to include this proposal in the upcoming budget. "By 2030, a significant number of vehicles will be electric, especially in Bengaluru. Motor vehicle tax is one of the major revenues of the state government and any shortfall will affect infrastructure and social welfare schemes. But talks are in early stages. The state government will have to approve the proposal," the sources said.
When contacted, transport commissioner SN Siddaramappa said, "EVs will have to reach a threshold. It's still in the discussion stage."
Karnataka has more than two crore registered vehicles of which EVs are only 1.5 lakh till December. Between May and December 2022, 61,598 EVs were registered in the state.
In March 2016, the state government exempted all EVs from paying road tax. In Karnataka, however, only road tax exemption with no registration fee is given to EV customers.
M any other states/UTs offer financial subsidies for EVs along with road tax exemption. Karnataka was also the first state in the country to come up with an Electric Vehicle and Energy Storage Policy in 2017. Experts fear a move to impose MV tax on EVs is likely to discourage prospective buyers. Many are reluctant to shift to EVs due to the high initial cost and inadequate number of charging stations. Pawan Mulukutla, director (energy technology and green mobility) at World Resources Institute India, an NGO, said: “At present, Karnataka is giving only road tax exemption and no financial subsidy is given to EV owners.
If the 100% road tax exemption is withdrawn what is the incentive for vehicle users to shift to EV? The road tax exemption should continue till sales of EVs touches around 20%. EV sales are only picking but it has not grown to a huge percentage,” he said. Registration charges have already been waived for all EVs across the country. At present, Karnataka imposes the highest road tax for non-EVs in the country. For cars below Rs 5 lakh, for instance, it is around 13% of the actual price, 14% for Rs 5 lakh-Rs 10 lakh, 17% between Rs 10 lakh-Rs 20 lakh, and 18% for above Rs 20 lakh. 1.5 lakh EVs in Karnataka Statistics show 18 lakh EVs have been registered across the country so far. Of this, Uttar Pradesh tops the list with 4.1 lakh e-vehicles followed by Delhi (1.8 lakh), Maharashtra (1.7 lakh), Karnataka (1.5 lakh), Rajasthan (1.2 lakh), Bihar (1.1 lakh) and Tamil Nadu (1 lakh). Of the 1.5 lakh e-vehicles, are 1.2 lakh (two-wheelers), 9,265 (cars), 7,105 (autorickshaws) and others.