The new Karnataka tax law intends to provide social insurance for workers. Karnataka Hikes Vehicle Registration Prices, and introduce a lifetime tax for electric automobiles. A new law that would increase the cost of automobile registration in the state of Karnataka has received approval from the Karnataka state administration.
The Karnataka Motor Vehicle Taxation (Amendment) Act, 2024 was approved by Governor Thaawarchand Gehlot on March 6. According to Money Control, the law was formally published in the gazette on March 7.
Karnataka Motor Vehicle Taxation (Amendment) Act, 2024: What Does It Say?
Transport vehicles will now be subject to an additional 3% levy under this new rule. The Karnataka Motor Transport and Other Allied Workers Social Security and Welfare Fund will receive this money.
In addition, a lifetime tax on electric cars (EVs) is now a possibility for the government. At the time of registration, an omnibus, electric car, jeep, or private service vehicle costing more than ₹25 lakh will be subject to a 10% tax. This is the first time the state has levied a levy of this kind on electric cars.
Impact On Prices
Karnataka currently has some of the highest road taxes in the nation, with rates ranging from 13% to 20%. Owning a vehicle will cost much more with the new 3% tax on transport vehicles.
On March 6, Governor Gehlot also gave his approval to the Karnataka Motor Transport and Other Allied Workers’ Social Security and Welfare Act, 2024. The purpose of this law is to offer social security and welfare benefits to employees in the transportation industry.
Who Does It Apply To?
Employees of auto transport firms, garages, workshops, and other businesses of a similar nature that have been approved by the state government are covered by the statute. It excludes some groups, such as government personnel and those in administrative positions, and defines workers as those engaged in the transportation industry.
Benefits Of The New Law For Workers
To supervise these actions, the state government would form the ‘Karnataka State Motor Transport and Other Allied Workers’ Social Security and Welfare Board.’ Senior officials from the Department of Labour as well as the Labour Minister will oversees this board. Motor Transport and Other Allied Workers (MTOAW) are entitled to several benefits, such as pension plans, child education assistance, maternity benefits, and accident benefits.
BH-Series Registration
In a related move, the Karnataka High Court has maintained a ruling that permits workers of for-profit businesses with operations across several states to register their cars under the Bharat (BH) series. To avoid losing money, the transport department is reluctant to encourage private sector workers to register for the BH series.
The ‘BH-series’ registration, which was introduced in August 2021 by the Union Ministry of Road Transport and Highways, makes it easier for people moving across states to register their vehicles.
Despite being made available to a range of government workers, the transport department is concerned about the possible impact on revenue if it were to be expanded to workers in the private sector. Based on the category or price of each car, they estimate that 5-7 percent of motor vehicle tax would be lost.
The aim of Karnataka’s lifetime tax on electric cars and increase in the new vehicle registration cost is to encourage environmentally friendly transportation while also providing more social security for workers. Nonetheless, the cost increase can discourage people from owning cars. Although social security benefits are anticipated to help car transport workers, revenue loss is a worry.
People might be discouraged from buying new cars as a result of the possible price increase, which might have an impact on the automotive sector as well as the economy as a whole. Concerns have also been elevated over how these actions may affect government income, especially if there is a large drop in vehicle registrations or tax evasion.
Tax Experts at Vakilsearch suggest that when Karnataka Hikes Vehicle Registration Prices, it indeed turns out beneficial for the workers in the transport sector. On a general note it might seem a bit heavy on the consumer’s front. Maintaining the efficacy and long-term viability of Karnataka’s tax policies will require striking a balance between these goals. For more legal inputs get in touch with our experts right away!
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