Karnataka’s move to tax EVs sparks adoption concerns

Karnataka’s move to impose a tax on electric cars, a year after waiving levies, could slow down adoption in one of India’s key electric vehicle (EV) markets by eroding their price competitiveness with petrol and diesel vehicles, industry experts said.

- Ayaan Kartik & Manas Pimpalkhare

The shift comes even as other states continue to offer tax breaks to push EV uptake.According to a bill passed in the Karnataka assembly last week, a tax in the range of 5-10% of a vehicle’s price will be imposed on all EV cars based on their price at the time of registration, which is expected to widen the price gap with less expensive internal combustion engine (ICE) vehicles.

The move partly negates the state's own clean mobility policy released in 2025, under which road and registration taxes were waived off for all electric vehicles, except those priced above ₹25 lakh.

This comes at a time when other large EV car markets like Maharashtra, Uttar Pradesh, Tamil Nadu and Delhi are moving to waive off all state taxes on EVs to promote their adoption.