EV companies stand tens as Karnataka govt plans to end exemption on road tax

In Karnataka, companies that sell

electric vehicles

Concerns about the potential removal of the MV tax exemption have been expressed by EV firms and potential customers since it would result in increased pricing for EVs in the state. EV usage has grown in Karnataka in recent years, but the higher costs may put off some potential buyers from making the move.

According to statistics, the state has almost 3 crore registered automobiles, including 2.37 lakh EVs. Karnataka has seen considerable growth in the number of EVs registered, going from 6,152 in 2019 to 9,716 in 2020, 33,314 in 2021, and 95,934 in 2022. In Karnataka, 77,711 electric vehicles (EVs) were registered between January 1 and July 6, 2023. Most electric vehicles (EVs) in Karnataka are

two-wheelers

The tax on motor vehicles is one of the government's main sources of income. Additionally, Karnataka has the highest internal combustion engine (ICE) car road tax in the nation. For instance, the tax rate is 13% of the real price for automobiles costing less than Rs 5 lakh, 14% for cars costing between Rs 5 lakh and Rs 10 lakh, 17% for cars costing between Rs 10 lakh and Rs 20 lakh, and 18% for cars costing more than Rs 20 lakh. Road taxes for two-wheelers range from 10 to 14 per cent of the price.

A senior transport department official stated, "We have suggested a 50% road tax for EVs, but the state administration has not yet made a final decision."

"It's too soon to implement a road tax on EVs," said Vivekananda Hallekere, co-founder of Bounce, a maker of electric two-wheelers. The FAME subsidy has already been decreased. This will raise the price of EVs, and the sector will not benefit from the abrupt implementation of road tax on EVs. Instead, the size of the government might grow gradually. A rapid increase in EV prices can put off potential customers.

Amit Gupta, co-founder and CEO of the electric mobility firm Yulu, stated that while his company won't be impacted, others who are considering purchasing EVs could. Although the state can't permanently exclude EVs from paying taxes, it should be done so gradually.

The Karnataka government exempted all EVs from paying road fees in March 2016. However, some governments give financial incentives to promote EVs, but Karnataka offers road tax exemption and free registration for EV purchasers.

The nation's first state to adopt an electric vehicle and energy storage policy was Karnataka in 2017. Although the policy was in effect for five years, a replacement has not yet been revealed by the administration.

The state administration, which is governed by Congress, is also putting pressure on the transport department to raise motor vehicle tax income. In Karnataka, where the party gained 135 seats in the 224-member assembly, the Congress party's election guarantees—which included everything from unemployment payments to free food grains for the poor—played a big role in the party's electoral success. However, it is predicted that putting these assurances into place will cost between Rs 50,000 and Rs 60,000 crore annually.