Rebate in motor vehicle tax proposed for scrapping old vehicles

To discourage the public from using old and polluting vehicles, the Union Ministry of Road Transport and Highways recently announced a plan to de-register 15-year-old commercial vehicles and 20-year-old private vehicles if they failed to get a fresh fitness certificate.

The Ministry issued a notification on March 29 inviting comments from stakeholders for the proposal within 30 days. Even if such vehicles get fitness certificates, they will have to pay a hefty amount for their re-registration, says the policy.

Also read: Vehicle scrapping policy: Insufficient incentive unlikely to trigger replacement, says Jefferies

According to the draft, the government proposes up to 25% concession in motor vehicle tax for non-transport vehicles and up to 15% in case of transport vehicles upon submitting a “Certificate of vehicle scrapping”. The concession will be valid for a period of 15 years for non-transport vehicles and for 8 years for transport vehicles, says the notification.

The concession is among the several incentives planned by the Centre, including waiver of registration fees on the purchase of new vehicles, to encourage scrapping of old vehicles. The discounts will be applicable from October 1, 2021, while the state will decide the exact percentage of discount they want to offer.

Announcing the details of the Voluntary Vehicle-Fleet Modernisation Program, the Ministry proposed that all vehicles of the Central Government, State Government, Municipal Corporation, Panchayats, State Transport Undertakings, Public Sector Undertakings and autonomous bodies with the Union and State Governments may be de-registered and scrapped after 15 years from the date of registration.