Indian national auto scrap policy on backburner after government imposes ‘green tax’ on old vehicles

Friday, 29 January 2021 12:24:12 (GMT+3)   |   Kolkata

The Indian government has announced the imposition of a ‘green tax’ on old commercial and passenger vehicles, indicating that a national policy for scrapping of vehicles has been put on the backburner, government sources said on Friday, January 29. As a result, according to the sources, a national automobile scrapping policy will not be implemented immediately.

The government has proposed a green tax in the range of 10-15 percent when any commercial vehicle comes up for renewal of its ‘fitness certification’ after eight years on the road. In the case of passenger vehicles, the same level of tax will be imposed only after 15 years.

In July 2019, the government had announced that the Motor Vehicles Act would be amended to allow scrapping of all vehicles that have been on the road for 15 years with the offer of a fiscal incentive for scrapping such a vehicle or tax rebates on the purchase of new vehicles, to take out an estimated 28 million vehicles older than 15 years on the roads in India.

The proposal for a national auto scrappage policy was first announced by the government in 2016.

The sources said that the old vehicle scrapping policy has been put on the backburner as the country did not have the infrastructure and scrappage units to handle all old vehicles that would be put up for scrapping and that the issue of such a national policy could be reviewed after the necessary infrastructure to handle scrappage was in place.

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