Electric Cars Get Upto Rs. 60,000 Cheaper In Kerala
Kerala's revised state budget, presented on June 18, 2026, has restructured road tax rates for electric vehicles across different price bands. The headline saving is up to Rs 60,000 on cars in the Rs 15 to 20 lakh bracket, where the road tax rate has been cut from 8 per cent to 5 per cent. That is a 3-percentage point reduction.
On a car priced at Rs 20 lakh, 3 per cent of Rs 20 lakh is Rs 60,000. On a car at the higher end of the band, the saving reaches Rs 74,000. This is a one-time saving paid at the time of registration, not a recurring annual benefit.
For EVs priced up to Rs 10 lakh, the road tax has been reduced from 5 per cent to 3 per cent. On a Rs 10 lakh car, that 2 percentage point reduction translates to a saving of Rs 20,000 at the RTO. EVs priced between Rs 10 lakh and Rs 15 lakh see no change; the 5 per cent rate applicable to that band stays unchanged.
The cuts are targeted at the volume end of the EV market. Cars between Rs 15 and Rs 20 lakh cover a significant share of mainstream electric SUVs and sedans that are actually selling in numbers, including several Tata, MG, and Hyundai offerings in this range.
The Rs 60,000 saving on a Rs 20 lakh car is the most meaningful reduction in this revision and is the figure that buyers in this segment should apply directly to their purchase cost calculations.
However, the state has simultaneously increased road tax for EVs priced above Rs 40 lakh from 10 per cent to 15 per cent. On a Rs 50 lakh EV, that increase costs the buyer Rs 250,000 more at registration.
On a Rs 70 lakh EV, the additional outgo is Rs 350,000. This portion of the revision targets the luxury EV segment, which includes vehicles like the BMW iX1, Mercedes-Benz EQS, and Kia EV9, and treats premium EV buyers as contributors to the tax base rather than as adopters who need incentive.
Kerala had previously offered road tax exemptions and reductions to push EV adoption, then partially withdrew them in 2024 citing financial constraints. That reversal was followed by a measurable slowdown in EV registrations in the state.
The current revision does not restore the earlier, more generous concessions, but it does move the tax structure in the right direction for the mid-market segment where most purchase decisions are made.
The state also announced separate relief for private bus operators. The quarterly tax on All India Tourist Permit buses has been cut from Rs 2,000 per seat to Rs 900 per seat, and from Rs 3,000 per sleeper seat to Rs 1,500 per sleeper seat. That is a 55 per cent reduction in per-seat tax for the AITP bus segment, which covers a significant portion of private long-distance and tourism bus operations from Kerala.
For anyone who was already looking at an EV priced between Rs 15 and Rs 20 lakh in Kerala, the saving is real and immediate. The road tax is paid once at registration, so the Rs 20,000 to Rs 60,000 saving comes off the total outgo on day one. It does not affect the ex-showroom price, insurance cost, or GST, but it reduces the on-road price, which is the number that matters when you are writing the actual cheque.
For buyers looking at EVs priced above Rs 40 lakh, the new rate works the other way. The road tax increase from 10 to 15 per cent adds a meaningful sum to an already high on-road cost, and those buyers need to factor it into their calculations before visiting a showroom.