Green Tax Proposal for old Polluting Vehicles

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The Union Minister Nitin Gadkari-led Ministry of Road Transport and Highways has approved the proposal to levy the Tax on older vehicles. The proposal will now be sent to the States for consultation before it is formally imposed.

Key Takeaways from the Proposal

  1. The tax could be as high as 50% of the road tax in most polluted cities like Delhi.
  2. The government said that the Green tax aims to dissuade people from using vehicles that damage the environment and motivate them to switch to newer, less polluting vehicles.
  3. The policy will only apply for petrol and diesel vehicles in a bid to protect the environment and curb pollution.
  4. Other vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG will be exempted.
  5. For Personal Vehicles:  green tax are to be charged at the time of renewal of registration certification after 15 years. Although this will not have much impact on the sales of new personal vehicles as tiny percent of owners use cars and two-wheelers beyond 15 years of age and they hardly goes for renewal of registration certificates.
  6. Public transport vehicles like city buses will be charged lower.
  7. For Commercial Vehicles: older than eight years the ‘Green tax’ would be charged at the time of renewal of fitness certificate at the rate of 10 to 25% of the road tax. Impact would be as follows:
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Vehicle Category

Impact

Green tax exemption

Annual road tax

Green tax rate percent of road tax

Green tax per annum post exemption

Cars (commercial)

Small

8 years

₹1600-3600

10-25%

₹160-900

CV goods 2T

Small

8 years

₹1730

10-25%

₹173-433

CV goods 7.5T

Small

8 years

₹4180

10-25%

₹418-1045

CV goods 16T

Small

8 years

₹8510

10-25%

₹851-2128

CV goods 25T

Small

8 years

₹15260

10-25%

₹1526-3815

*Road tax p.a. is taken for Maharashtra

 

The move comes at a time when the auto sector is recovering from the worst of the pandemic. This move would lead to higher operating costs for transport operators. The Green tax’s revenue would be kept in a separate account and used to tackle pollution and set up state-of-the-art facilities for emission monitoring.

Along with this the government also approved the policy of deregistration and scrapping of vehicles owned by the government, which are above 15 years of age, and will come into effect from April 1, 2022. Automakers are awaiting for the details of the policy that has been in the works for long.

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