Karnataka to impose lifetime tax on yellow board vehicles starting May 1

synopsis

Bengaluru: Compared to other states in India, purchasing a vehicle in Karnataka will be more expensive from tomorrow. The state government already levies various taxes, and now, starting May 1st, lifetime taxes are set to increase. Buying small goods vehicles, taxis, and electric vehicles with yellow boards is becoming even more costly. From May 1st, lifetime tax will be mandatory for yellow board vehicles in Karnataka. The new order comes into effect tomorrow. The 'Karnataka Motor Vehicles Taxation (Amendment) Bill-2025' was passed in the Legislative Assembly on Friday.

The Karnataka Congress government has dealt a blow to those purchasing yellow board vehicles. The governor has approved the tax amendment bill, and the new tax policy will be implemented from tomorrow. Anyone buying a yellow board vehicle under ₹10 lakh will have to pay a lifetime tax. Construction material transport vehicles, commercial vehicles, and electric cars will also face higher taxes.

The new tax policy changes everything. Previously, yellow board vehicles under ₹10 lakh were taxed ₹100 per seat every three months. A 4-seater vehicle incurred a tax of ₹400. This rule has been changed. Now, a 5% lifetime tax will be levied on yellow board vehicles under ₹10 lakh. This means that from tomorrow, anyone buying a ₹10 lakh yellow board vehicle in Karnataka will have to pay a lifetime tax of ₹50,000. This, along with road tax, insurance, and other taxes, will significantly increase the on-road price.

Commercial electric vehicles above ₹25 lakh will now be subject to a 10% tax. Previously, these vehicles were exempt. The amendment bill imposes a 10% lifetime tax, amounting to ₹2.5 lakh, on newly registered EV cabs above ₹25 lakh. This applies to vehicles with yellow boards. Sources indicate that this amendment is expected to generate an additional annual revenue of ₹112.5 crore.

Similarly, newly registered rental motor vehicles (yellow board cabs) valued up to ₹10 lakh will be subject to a 5% tax. The lifetime tax on vehicles transporting construction equipment has been increased from 6% to 8%.