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Government To Impose Green Tax On Old Vehicles; Proposal Approved By Union Minister Nitin Gadkari


The Indian government may soon introduce a ‘Green Tax’ on old vehicles. The revenue collected through the green tax will be used to reduce/tackle pollution in India.

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Green Tax will be higher for cars being re-registered in highly polluted cities

The Union Minister for Road Transport and Highways, Nitin Gadkari, has approved a proposal for the government to levy a ‘Green Tax’ on old vehicles. The idea is to clean up the environment by phasing out unfit and pollution vehicles. The revenue collected through the green tax will be used to tackle pollution. The proposal in its current form will be sent to all states for consultation, before it is formally notified. The idea is to dissuade people from not using old vehicles, which cause more pollution and motivate them to buy new, less polluting vehicles. Cars which are over 15 years old and are owned by various government departments and PSUs will be de-registered and scrapped. The scrappage policy for government vehicles will come into effect from April 1, 2022.

Also Read: Vehicle Scrappage Policy Likely To Be Approved By The Government Soon

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(Green Tax on public transport vehicle will be lesser than that on personal vehicles)

Coming back to the details about the Green Tax, the proposal says that vehicles older than eight years could be charged green tax at the time of fitness certificate renewal. The amount could be between 10 per cent and 25 per cent of the road tax. In case of personal vehicles, green tax could be levied at the time of renewal of registration certificate after 15 years. The bad news is that the percentage of green tax could go up to 50 per cent of the road tax, when a vehicle is re-registered in highly polluted cities.

Also Read: MoRTH Extends Validity Of Motor Vehicle Documents Till March 31, 2021



(Vehicles manufactured before 2000 contribute to about 65-70% of total vehicular population)

The proposal also suggests that the slab of tax will be different depending on fuel used and the type of vehicle as well. Vehicles like hybrids, electric vehicles and ones which use alternate fuels like CNG, Ethanol, LPG etc. are likely to be exempted. Vehicles used for farming purposes such as tractor, harvester, tiller etc. are likely to be exempted as well.


(There will be no green tax imposed on strong hybrids, EVs and vehicles which use alternate fuels)


The government says that commercial vehicles, which comprise 5 per cent of the total vehicle fleet, contribute to about 65 to 70 per cent of total vehicle pollution. Similarly, vehicles which were manufactured before 2000, constitute of just 1 per cent of the total fleet but contribute to about 15 per cent of total vehicle pollution. Older vehicles pollute 10 to 25 times more than modern vehicles and that is something that the government wants to address once the Green Tax on old vehicles is implemented.

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