A year after scrapping EV levy, Karnataka's new tax raises concern over adoption

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. 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 in the state, 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 such as Maharashtra, Uttar Pradesh, Tamil Nadu and Delhi are moving to waive off all such state taxes on EVs to promote their adoption.“At a time when EV adoption is crucial to cutting vehicular pollution and improving urban air quality, this decision risks undermining the state’s stated ambition of promoting zero emission mobility,” Sharif Qamar, associate director at The Energy and Resources Institute (Teri), said.

“The state government should continue to give incentives to zero-emission technologies till they achieve price parity, and the ecosystem achieves a comfortable level of maturity with respect to charging infrastructure.”“New technologies require sustained policy support in their early years to reach scale. However, as markets mature, a calibrated transition becomes necessary,” said Amit Bhatt, India managing director at