Kerala Slashes Road Tax On Mid-Range EVs, Savings Reach Rs 60,000

EV buyers in Kerala Can Save Up To Rs 60,000 After The State's Latest Road Tax Revision.

Kerala presented its latest state budget on June 18, 2026, introducing several changes that will affect electric vehicle (EV) buyers across the state. The government has decided to revise the road tax structure for new electric cars, offering significant savings for buyers of mid-range EVs while increasing taxes on luxury electric vehicles.

One of the biggest changes is for electric cars priced between Rs 15 lakh and Rs 20 lakh. The road tax for these vehicles has been cut from 8 per cent to 5 per cent. As a result, a buyer can save about Rs 60,000 on a car that costs Rs 20 lakh. For some cars at the top of this price range, the total saving could even reach Rs 74,000. These savings apply at the time of the vehicle's first registration.

There is also a smaller tax benefit for the most affordable electric cars. If an EV costs less than Rs 10 lakh, the road tax has been reduced from 5 per cent to 3 per cent, helping buyers save around Rs 20,000 on a Rs 10 lakh car. However, for electric vehicles priced between Rs 10 lakh and Rs 15 lakh, the tax rate remains unchanged at 5 per cent.

While mid-range cars got a tax cut, luxury electric vehicles will now be more expensive. For any EV priced above Rs 40 lakh, the road tax has increased from 10 per cent to 15 per cent, resulting in a major increase in registration costs. For example, a buyer purchasing a Rs 50 lakh electric car will now have to pay Rs 2.5 lakh more than before, while the extra tax rises to Rs 3.5 lakh if the car costs Rs 70 lakh. This change will mainly affect buyers of premium electric vehicles.

The Kerala government also announced help for people who run private bus businesses by reducing the quarterly tax for buses with an All India Tourist Permit. For buses with regular seating, the tax dropped from Rs 2,000 to Rs 900 per seat, while for buses with sleeper berths, it was reduced from Rs 3,000 to Rs 1,500 per seat. This is a 55 per cent reduction in tax, which will help long-distance and tourism bus companies in the state.

Kerala previously offered several incentives for electric vehicles but withdrew some of them in 2024 as the state sought additional revenue. The removal of these benefits made EV ownership less attractive for buyers. While the latest changes do not restore the larger tax benefits offered earlier, they do make electric cars more affordable for mainstream buyers.

Buyers planning to purchase an electric SUV or sedan priced between Rs 15 lakh and Rs 20 lakh will benefit from a lower on-road price. However, those looking at a luxury electric car should be prepared to pay a much higher registration cost under the new tax structure.