Under the new regulations, taxis prices are below Rs 1 million, and now attract a lifetime tax of 5% of the cost of the vehicle, which should be paid in full at registration. |Picture source: File Photo
The Karnataka government began implementing the Karnataka Motor Vehicle Taxation (Amendment) Act on May 1, making significant changes to the way commercial vehicles are taxed in the state. Under the new regulations, taxis prices are below Rs 1 million, and now attract a lifetime tax of 5% of the cost of the vehicle, which should be paid in full at registration.
Commercial taxis in the price sector so far are exempt from lifetime taxes and instead pay a tax rate of Rs 100 per seat for four-seat cars, about Rs 1,800 per year, including CESS. The updated strategy replaced the quarterly system with a one-time payment, which many operators say will make small business owners the hardest hit.
“This change will be greater than that of the large fleet owners,” said K. Radhakrishna Holla, president of the Karnataka State Travel Agency Association. “For vehicles that cost Rs 1 million, the lifetime tax rate is now around Rs 50,000. Most commercial vehicles fall into this category, so it will be a major setback for small operators.”
The revised tax board is further used for vehicles within higher price brackets. Now, buyers of commercial vehicles must now place 9% of the cost of the vehicle as a lifetime tax, while those who purchase vehicles over Rs 15 lakh are 15% at 15%. Even electric vehicles, if the price of electric vehicles exceeds Rs 2.5 lakh, these electric vehicles will now attract 10% tax under the new structure.
Mr. Hora criticized the move to include electric vehicles in the tax network, saying: “Karnataka has lagged behind electric vehicles. A new tax on commercial electronic vehicles at this stage will prevent drivers from turning to cleaner alternatives.”
Ravi S. Ravi S., a taxi driver who owns a vehicle.
publishing – May 10, 2025 at 11:21 pm ist
