Electric Cars, SUVs Set To Become More Expensive In Kerala With Increase In Road Tax

The Kerala government is all set to raise lifetime road tax on electric cars and SUVs sold in the state. In order to keep up with the increasing rate of EV adoption in the state, the older tax rate of 5 per cent has been hiked for more expensive EVs. Announced as part of the 2025 Kerala budget presentation, EVs priced upwards of Rs 15 lakh will be taxed at 8 per cent, while 10 per cent tax will be imposed on EVs that cost over Rs 20 lakh. Additionally, it was also announced that EVs with battery rental schemes will now be taxed at 10 per cent, irrespective of their price.

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Kerala has consistently ranked among the states with the highest rate of EV adoption in India. Four-wheeler EV sales in Kerala stood at over 10,000 units in 2024 as per data from VAHAN. The Kerala government expects to generate an additional Rs 30 crore in revenue, after the passing of the new tax laws. 

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With the new tax regime, EVs priced over Rs 15 lakh are all set to become more expensive in the state. The best-selling EVs that cost between Rs 15 lakh to Rs 20 lakh include the Tata Nexon EV, Tata Curvv EV, MG Windsor, MG ZS EV and the Mahindra XUV 400, all of which are likely to be affected by this hike. Some popular EVs over Rs 20 lakh on the other hand, include the likes of the BYD Atto 3 and BYD Seal, in addition to other electric vehicles from luxury car manufacturers such as Mercedes-Benz, BMW, and Volvo, which will see the biggest rise in road tax.