Government approves green tax proposal and scrappage policy, effective April 2022

Tuhin Guha Updated: January 25, 2021, 11:12 PM IST

The Ministry of Road Transport and Highways has approved the proposed vehicle scrappage policy, a legislation that has been mulled over for a few years now and one that could noticeably affect car-buying and usage patterns in the country. This aside from its direct effects of reduced vehicular pollution and increased demand for automobiles.

As per the approved scrappage policy, which comes in to effect April 1 2022, all government-owned vehicles that are more than 15 years old will be taken off the streets.  A more far-reaching development for road users is the proposed green tax policy being approved alongside the scrappage scheme. As per this proposal, transport vehicles older than 8 years could be taxed from 10 to 25 per cent of the road tax. For personal vehicles, the green tax could be levied on vehicles older than 15 years.

Photo by Matt Boitor on Unsplash

The quantum of green tax will be calculated once vehicles come in to renew fitness certificates. Some exceptions are being made, city buses will be charged a lower green tax while personal vehicles renewing registrations in highly polluted cities will be charged a higher rate of tax, of up to 50 per cent. The degree of taxation will be based on fuel and vehicle type as well.

This ruling will also spur the growth of electrification and alternate fuel vehicles. Strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol, LPG, etc. are set to be exempted from this green tax. Also free from this are farm and agricultural equipment like tractors, tillers and harvesters. This policy is set to be implemented at the national level, the proposal has now been sent to state governments for consultation before formal notification is made.


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