Karnataka Assembly passes Bill to impose additional cess on new vehicles

Bengaluru: The Karnataka Legislative Assembly has approved a new bill imposing an additional cess on private two-wheelers and cars during their registration. The bill, despite facing protests from opposition parties, was passed on December 17.

The Karnataka Motor Vehicles Taxation (Second Amendment) Bill, introduced by Law and Parliamentary Affairs Minister HK Patil, mandates a Rs 500 cess on private two-wheelers and Rs 1,000 on cars. The collected funds will be directed to the Karnataka Motor Transport and Other Allied Workers Social Security and Welfare Fund, which benefits drivers of buses, cabs, and auto-rickshaws.

The new cess will be added to the existing cess under the Motor Vehicles Act of 1988 and will be collected at the time of registration for non-transport vehicles.

Karnataka already collects one of the highest motor vehicle taxes in the country. The state currently imposes an 11 percent cess on taxes under the Motor Vehicles Act, of which 10 percent is allocated for infrastructure development, investments in Bengaluru’s Mass Rapid Transit System, and the Chief Minister’s Rural Road Development Fund. The remaining 1 percent is used for the Urban Transport Fund.

Additionally, a 3 percent cess is levied on commercial vehicles (yellow board) and is also directed to the welfare fund for transport workers.

While the new cess is aimed at improving the welfare of public transport workers, it has sparked a debate regarding the increasing cost of vehicle ownership in the state. Critics argue that the additional charges may place a financial burden on vehicle owners.