In a significant development, the Karnataka Motor Vehicle Taxation (Amendment) Act, 2024 has been approved by Governor Thaawarchand Gehlot on March 6 and subsequently gazetted on March 7. The amendment introduces notable changes affecting both commercial vehicles and electric vehicles (EVs) in the state.

1. 3% Additional Cess for Social Security Fund:

• The amendment mandates a 3% additional cess on newly registered transport vehicles (yellow board commercial vehicles), including taxis, buses, and auto-rickshaws.
• This extra cess will contribute to the Karnataka Motor Transport and Other Allied Workers Social Security and Welfare Fund.

2. Lifetime Tax on High-Cost EVs:

• Electric vehicles (EVs) with a cost exceeding Rs 25 lakh will now face a lifetime tax of 10% of the vehicle’s cost at the time of registration.
• Notably, in 2016, Karnataka exempted all EVs from road taxes, but the recent amendment introduces a lifetime tax for higher-priced EVs.

3. High Road Taxes in Karnataka:

• Karnataka currently imposes one of the highest road taxes in the country, ranging from 13% to 20%.
• The existing road tax structure includes an 11% cess, comprising 10% infrastructure cess and 1% urban transport cess.

4. Karnataka Motor Transport and Other Allied Workers’ Social Security and Welfare Act, 2024:

• Governor Gehlot also approved the Karnataka Motor Transport and Other Allied Workers’ Social Security and Welfare Act, 2024.
• The act aims to provide social security and welfare measures for the well-being of workers in motor transport and allied sectors.

5. Welfare Board for Workers:

• The state government will establish the ‘Karnataka State Motor Transport and Other Allied Workers’ Social Security and Welfare Board.’
• The board, including ex-officio members like the Labour Minister and additional chief secretary/principal secretary/secretary of the Department of Labour, will oversee benefits for workers, including accident benefits, educational assistance, maternity benefits, and pension schemes.

6. BH Series Vehicle Registration Dispute:

• The Karnataka High Court dismissed the state government’s appeal to exclude private sector employees from BH series vehicle registration.
• The BH series registration was introduced by the Union Ministry of Road Transport and Highways to simplify vehicle registration for individuals relocating between states.

7. Impact on Revenue:

• Transport department officials express concerns that allowing BH series for private employees could lead to a revenue loss of 5-7% of Motor Vehicle tax per vehicle based on its category or price.

These legislative changes signify a shift in Karnataka’s approach to vehicle taxation and welfare measures, impacting both commercial and electric vehicle owners in the state.

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