Green Tax On Older Vehicles Will Be Imposed Soon

Aiming at cleaning up the environment by phasing out unfit and polluting vehicles, Road Transport and Highways Ministry has approved a proposal to levy a “Green Tax” on vehicles older than eight years at the time of renewal of fitness certificate.

The proposal approved by the Road Transport Minister Nitin Gadkari, will be sent to states and Union territories for their comments before being formally notified.

The revenue collected through the tax will be used for tackling pollution, the transport ministry said in a statement.

Gadkari also approved the policy of deregistration and scrapping of vehicles owned by government departments and PSUs above 15 years. It will be notified and come into effect from April 1, 2022.

The main principles to be followed while levying the ‘green tax’ includes; transport vehicles older than eight years could be charged at the time of renewal of fitness certificate at the rate of 10 to 25 per cent of the road tax, personal vehicles to be charged ‘green tax’ at the time of renewal of Registration Certification (RC) after 15 years while public transport vehicles, such as city buses, to be charged lower.

The government has also proposed higher tax (50 per cent of the road tax) for vehicles registered in highly polluted cities.

According to the Ministry, differential tax, depending on fuel (petrol/diesel) and type of vehicle; vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG etc to be exempted.

Vehicles used in farming, such as tractor, harvester, tiller etc., will also be exempted. The revenue collected from the ‘green tax’ will be kept in a separate account and used for tackling pollution, and for states to set up state-of-art facilities for emission monitoring.

The ministry in its long-pending draft vehicle scrappage policy, also stated it will include a waiver in registration fee and reduced road tax by states for vehicles purchased against scrapping certificates by scrapping old vehicles in an environment friendly and scientific manner.

The move expected to dissuade people from using vehicles which damage the environment and also to motivate people to switch to newer, less polluting vehicles.

It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet , contribute about 65-70% of total vehicular pollution. The older fleet, typically manufactured before the year 2000 constitute less that 1 % of the total fleet but contributes around 15% of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles