The Kerala Budget 2025 has introduced a series of tax revisions for contract carriages, private vehicles and electric cars to simplify the tax structure, increase state revenue and curb tax evasion.

Contract carriages registered within state

• 6 to 12 seats: Vehicles with 6 to 12 seats will now have a unified quarterly tax rate of Rs 350 per seat, replacing the previous differential rates of Rs 280 for ordinary seats, Rs 450 for pushback seats, and Rs 900 for sleeper seats. 
• 13 to 20 seats: Vehicles with 13 to 20 seats will shift to a common rate of Rs 600 per seat, instead of Rs 480 for ordinary seats, Rs 680 for pushback seats, and Rs 1,350 for sleeper seats. 
• 20 seats and above: Vehicles with 20 seats and above will have a standard rate of Rs 900 per seat, replacing the previous rates of Rs 680 for ordinary seats, Rs 900 for pushback seats, and Rs 1,800 for sleeper seats. 

• The quarterly tax for heavy passenger sleeper berth buses will be reduced from Rs 1,800 to Rs 1,500 per berth. 

This simplification is expected to boost state revenue from contract carriages by Rs 15 crore, increasing the total annual revenue to Rs 307 crore. 

Contract carriages from other states

• A unified tax of Rs 2,500 per seat will be applied, replacing the previous rates of Rs 2,250 for ordinary seats and Rs 3,000 for pushback seats. 
• The tax for sleeper berths remains unchanged at Rs 4,000. 
• This change is expected to add Rs 1 crore to the state’s annual revenue from these vehicles, bringing it to Rs 11 crore. The government believes this rationalisation will help tackle tax evasion in online payments. 

Road Tax reduced for stage carriages
In an effort to promote public transport, the government has decided to reduce the quarterly road tax for stage carriages by 10%. While this move aims to put more public transport buses on the road, it is expected to reduce the state’s annual revenue from stage carriages by Rs 9 crore, down from Rs 90 crore to Rs 81 crore.

Road tax hiked for older vehicles
To discourage the use of older vehicles, the government will increase the road tax by 50% for private two-wheelers, three-wheelers, and motor cars older than 15 years. This hike is expected to generate an additional Rs 55 crore, raising the total revenue from private vehicles to Rs 165 crore per year.

Electric Vehicles
For private electric vehicles, the lifetime tax has been adjusted based on the vehicle's cost:

• 8% of the vehicle cost for electric cars costing above Rs 15 lakh. 
• 10% of the vehicle cost for those costing Rs 20 lakh and above. 
• Electric cars with battery renting facilities will be taxed at 10%, regardless of the vehicle’s cost.

This adjustment is anticipated to bring in Rs 30 crore in additional revenue.