Karnataka targets out-of-state vehicles with new tax to curb pollution

Bengaluru,  : With a sharp rise in the movement of vehicles registered outside Karnataka, the state government has rolled out a new plan aimed at tackling growing air pollution and ensuring tax compliance.

Officials note that a significant number of vehicles—particularly those registered in Delhi and other states—are increasingly operating across Karnataka, especially in Bengaluru. This surge has contributed to worsening air quality and environmental concerns in several urban pockets.

To address the issue, the Karnataka government has promulgated the Karnataka Motor Vehicles Taxation (Amendment) Ordinance, making it mandatory for owners of out-of-state registered vehicles that are used permanently within the state to pay applicable road taxes locally.

Tax net widened
Under the new provisions, vehicles such as cars, jeeps, mini-buses, and two-wheelers registered outside Karnataka but operating continuously within the state will now fall under the state tax regime.

The revised tax structure specifies:

Vehicles priced between ₹10 lakh and ₹15 lakh will attract a 15% tax
Vehicles valued above ₹15 lakh will be subject to an 18% tax
For older vehicles, the tax rate will vary depending on factors such as age and depreciation.

Electric vehicles included
In a notable shift, the government has also brought certain high-value electric vehicles (EVs) under the tax ambit. While EVs previously enjoyed broad tax exemptions, the revised policy proposes:

10% tax on electric vehicles priced above ₹25 lakh
This marks a partial rollback of earlier incentives, signalling a more balanced approach between promoting green mobility and boosting state revenue.

Environmental and revenue push
The move is seen as a dual strategy—curbing unchecked vehicular inflow from other states while also augmenting state revenues. Authorities believe that enforcing local taxation on long-term out-of-state vehicle usage will help regulate traffic patterns and reduce environmental stress.

Transport department officials are expected to soon roll out enforcement mechanisms to identify vehicles that fall under the new rule and ensure compliance.

The ordinance is likely to have a significant impact in Bengaluru and other major cities, where the density of out-of-state vehicles has risen sharply in recent years.