Finance Minister K.N. Balagopal announced major tax hikes in the Kerala State Budget 2025-26, that will raise the cost of owning electric vehicles (EVs) and private vehicles older than 15 years. The changes include higher road taxes for premium EVs and a 50% increase road tax for older vehicles, as the government looks to boost revenue amid financial constraints.
Currently, lifetime road tax for all EVs is set at 5% of the cost of vehicle, but going forward, this will vary based on the cost of the vehicle. EVs priced above Rs 15 lakh will face an increased road tax of 8%, while those exceeding Rs 20 lakh will be taxed at 10% of their value. Additionally, EVs with battery rental options will also be subject to a 10% tax, irrespective of their cost. The state expects to generate an additional Rs 30 crore from these revisions.
While entry-level EVs like the Tata Punch EV, priced below Rs 15 lakh, will remain unaffected, premium models will see a price hike. For example, the top-end variant of the MG Windsor will cost approximately Rs 48,000 more due to the tax increase from 5% to 8%. Similarly, the top-end Tata Nexon EV will see an increase of around Rs 51,000. EVs priced above Rs 20 lakh will experience an even steeper rise in on-road prices, with the top end variant of Mahindra’s newly launched BE 6 incurring an additional Rs 1.35 lakh in road tax.
Alongside the EV tax hike, the finance minister has also announced a 50% increase in road tax for older vehicles, citing environmental concerns and the need to discourage their continued use. After 15 years, vehicles are required to pay road tax every five years, and this tax has now been increased. While the exact revised charges were not explicitly detailed in the budget, estimates based on the announced hike suggest:
Two-wheeler road tax will rise from Rs 900 to Rs 1,350.
Three-wheeler road tax will increase from Rs 900 to Rs 1,350.
Road tax for motor cars weighing less than 750 kg will go up from Rs 6,400 to Rs 9,600.
Road tax for motor cars weighing between 750-1,500 kg will go up from Rs 8,600 to Rs 12,900.
Road tax for motor cars weighing more than 1,500 kg will go up from Rs 10,600 to Rs 15,900.
Currently, the government earns Rs 110 crore annually from private vehicle re-registration fees, which is projected to rise by Rs 55 crore with this revision.
The budget also revises the tax structure for contract and stage carriages. Contract carriages, such as rented taxis or tourist buses, will now have a standardised tax structure, expected to generate an additional Rs 15 crore in revenue for the state.
To encourage public transportation, the government has also announced a 10% reduction in quarterly road tax for stage carriages (public transport buses). However, this measure is expected to result in a revenue loss of Rs 9 crore.
