Karnataka Government Faces Criticism Over Electric Vehicle Tax Changes

The Union Minister for New and Renewable Energy, Pralhad Joshi, has publicly condemned the Karnataka government's recent modifications to its electric vehicle (EV) policy. In a video statement released on Friday, Joshi reacted to the state's decision to withdraw tax exemptions on EVs, which he claims will impose additional financial strain on the middle class.

Joshi described the removal of tax brakes on electric vehicles as a 'step backwards from reforms' and questioned the rationale behind Karnataka 'shifting into reverse gear' while other regions globally advance towards clean energy solutions. He pointed out that the new policies reflect a significant regression in the state's approach to promoting electric vehicles.

The minister's remarks came shortly after Karnataka announced it would implement a lifetime tax on electric cars and buses, repealing previous incentives meant to encourage greener transportation options. This new structure applies tax rates ranging from 5% to 10%, depending on the vehicle's cost. For instance, cars priced below ₹10 lakh will incur a 5% charge, while those valued between ₹10 lakh and ₹25 lakh will see an 8% levy.

Cars above ₹25 lakh already carry a 10% road tax. Joshi expressed concerns that these changes would make electric vehicles less affordable, significantly impacting the accessibility for everyday consumers, particularly those from the middle-income bracket. He warned that such fiscal measures might create barriers to EV adoption, thereby hindering the state’s environmental goals.

Criticism directed towards the Congress-led Karnataka government framed this policy reversal as detrimental to both consumers and sustainable innovation. Joshi declared that Karnataka, previously revered as a leader in clean transportation initiatives, is now regressing due to 'anti-people, anti-innovation, and anti-technology' policies.

Furthermore, he alleged that the government prioritises revenue generation over the sustainable development of ecology-friendly solutions. Joshi indicated that the adjusted policies might unfairly incentivise the use of traditional fuel vehicles by making electric options increasingly unaffordable.

A key component of Karnataka's revised EV strategy involves the introduction of the Karnataka Motor Vehicles Taxation (Amendment) Bill, 2026, which has already passed the Legislative Assembly. The government anticipates that the enforced changes could yield up to ₹250 crore in revenue during the 2026–27 period.

Critics have spoken out against this policy change. Sivaram G, a retired professional from the State Bank of India, has characterised the decision as 'retrograde', noting that it stands in stark opposition to national and global efforts to espouse electric mobility.

He cautioned that escalated taxation on electric vehicles could inhibit adoption rates, complicating India’s capacity to fulfil its climate goals, including a significant reduction in air pollution levels by 2030. Overall, stakeholders express apprehension that Karnataka's new tax measures could undermine the long-term objectives for a sustainable and robust electric vehicle market in the state.