Karnataka to introduce ₹500 cess on vehicle registrations from February: Report

The newly imposed cess includes a charge of ₹500 for two-wheelers and ₹1,000 for cars at the time of registration in Karnataka.

Starting February, vehicle buyers in Karnataka will face an additional charge during registration, with two-wheelers incurring a cess of ₹500 and cars ₹1,000.

The move is aimed at funding welfare initiatives for transport industry workers. (Bloomberg)

According to a report by The Hindu, the move is aimed at funding welfare initiatives for transport industry workers. This stems from the Karnataka Motor Vehicles Taxation (Second Amendment) Bill, 2024, passed by the Legislative Assembly last December.

The new cess will contribute to a social security fund established under the Karnataka Motor Transport and Other Allied Workers’ Social Security and Welfare Act, 2024, the report added.

This fund, managed by a welfare board, is designed to address the needs of approximately 30 lakh individuals employed in the transport sector, including drivers, mechanics, and support staff.

Transport Minister Ramalinga Reddy sais cess ensures a steady flow of resources to improve the lives of transport workers. The welfare board will ensure these funds are utilized effectively, the report added.

Officials from the Transport Department estimate that the cess will generate ₹300 crore annually. The funds will be directed exclusively to the welfare board, which will oversee their allocation. The department has confirmed that preparations are underway to implement the cess starting February.

This scheme mirrors the Karnataka Building and Other Construction Workers Welfare Fund, which is financed through a cess on construction activities. The government aims to replicate its success in creating a sustainable welfare mechanism for transport workers.

The Bill was presented by Law and Parliamentary Affairs Minister H K Patil on behalf of Transport Minister Ramalinga Reddy in December 2024.