Karnataka: New cars to attract cess of Rs 1,000, bikes Rs 500

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The Karnataka assembly on December 17 passed a bill to impose an additional cess of Rs 500 and Rs 1,000 on private two-wheelers and cars, respectively, at the time of registration, despite protests from the opposition BJP.

The Karnataka Motor Vehicles Taxation (Second Amendment) bill was piloted by law and parliamentary affairs minister HK Patil who said the money would be allocated to the Karnataka Motor Transport and Other Allied Workers Social Security and Welfare Fund, which supports bus, cab and auto-rickshaw drivers.

Also read: Karnataka to impose 3% additional cess on newly registered transport vehicles; lifetime tax on EVs above Rs 25 lakh

The cess of would be collected during the registration of non-transport vehicles. This levy is in addition to the existing cess under Section 3 of the Motor Vehicles Act, 1988 (Central Act 59 of 1988).

Karnataka collects one of the highest motor vehicle taxes in the country. At present, the state collects an 11 percent cess on the tax levied under Section 3 of the Motor Vehicles Act. Of this, 10 percent is allocated for various projects, including infrastructure development, equity investments in Bangalore Mass Rapid Transit Limited and the Mukhya Mantri Grameena Rasthe Abhivruddhi Nidhi (Chief Minister’s Rural Road Development Fund). The remaining 1 percent is directed to the Urban Transport Fund.

It also imposes a 3 percent cess on transport vehicles (yellow board commercial vehicles), which is being directed to the Karnataka Motor Transport and Other Allied Workers Social Security and Welfare Fund.

Also read: Karnataka Budget: State to impose cess on commercial transport vehicles, multi-storied buildings & online deliveries