Telangana imposes road tax on electric vehicles

Date: August 22, 2023: The Telangana state government has decided to replace the road tax exemption previously enjoyed by electric cars with a new system that imposes higher rates on these vehicles. This move has sparked a debate among various stakeholders. It also drawn attention to the state’s approach towards promoting electric mobility and environmental sustainability.

They replaced the exemption from paying road tax for electric vehicles with a fee that ranges from 11 to 15%. Many potential buyers of EVs were unaware of the change, which took effect on August 1, 2023.

The decision, announced by the Telangana Transport Department, comes as part of the government’s efforts to address revenue shortfalls. This also aims to ensure a more equitable taxation system for all vehicle owners. Under the previous policy, electric car owners were completely exempt from paying road taxes. This made electric vehicles an attractive option for consumers looking to reduce their overall ownership costs.

Electric cars face notably elevated road tax rates compared to traditional internal combustion engine vehicles under the new regulations. Officials have indicated that they will calculate the exact rates based on factors such as the vehicle’s price, weight, and battery capacity, although the finalization of these rates is pending. The government aims to generate additional revenue through these increased rates. This revenue will contribute to funding road infrastructure and maintenance projects.

Industry experts and environmental activists have expressed mixed reactions to the policy change. Supporters of the decision argue that electric car owners should contribute their fair share to road infrastructure development and maintenance. This is similar to the responsibility of owners of gasoline or diesel vehicles. They also suggest that as electric vehicle adoption increases, the government’s revenue from fuel taxes is likely to decline. This makes alternative revenue sources essential.

However, critics of the move fear that the higher road tax rates could discourage potential buyers from choosing electric vehicles. This could undermine the state’s efforts to reduce air pollution and combat climate change. They argue that incentivizing electric mobility through tax exemptions has played a crucial role in boosting the adoption of electric vehicles. They also believe that the new policy could hinder the progress made so far.

The new rates surpass other state charges, like Karnataka’s 8% flat EV road tax, proving much costlier for consumers. The state’s goal of having 10% of all new vehicles registered in Telangana be electric vehicles by 2030 can be negatively impacted due to the new tariffs.

The Telangana government has indicated that it will closely monitor the impact of the revised road tax policy on electric vehicle adoption and the state’s revenue. Adjustments to the rates might be considered in the future based on the outcomes observed.

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