Government proposes up to 25% concession on road tax against a vehicle scrapping certificate

The Road Transport and Highways Ministry on March 30, 2021, issued draft rules regarding the concession in the motor vehicle tax against the scrapped vehicles.

Under the rules, the central government has proposed up to 25 percent of tax concession on the purchase of the new vehicles on the submission of the scrappage certificate.

In the case of non-transport vehicles, the concession on the motor vehicle tax will be 25% and 15% in the case of transport vehicles.

The Union Minister of Road Transport and Highways Nitin Gadkari, while unveiling the Vehicle Scrapping Policy in Lok Sabha stated that the proposal will help in improving fuel efficiency and will reduce pollution.

How long will be the concession?

According to the Ministry, the concessions will be available up to 8 years in the case of transport vehicles and will be up to 15 years in case of non-transport vehicles. The time period of the concession will be reckoned from the date of the first registration.

Rules proposed by the government under Vehicle Scrapping Policy:

•  The Commercial vehicles must be de-registered after 15 years in case they fail to get the fitness certificate.

•  As a disincentive measure, the increase in fees for the fitness test and certificate may be applicable for the commercial vehicles 15 years onwards from the date of their initial registration.

•  Private vehicles must be de-registered after 20 years if they are found unfit or in case of a failure to renew the registration certificate.

•  As a disincentive measure, the increase in re-registration fees will be applicable for the private vehicles 15 years onwards from the date of the initial registration.

•  All the vehicles of the state government, central government, panchayats, municipal corporations, public sector undertakings, state transport undertakings, and autonomous bodies with state and union governments must be de-registered and scrapped after 15 years from the registration date.

•  The scheme will also be providing strong incentives to the owners of the old vehicles to scrap unfit and old vehicles through the registered scrapping centres. In turn, the center will provide the owners with scrapping certificates.

•  The Road Transport and Highways Ministry will promote the setting up of the Registered Vehicle Scrapping Facility- RVSF across the country. It will also encourage private and public participation in the opening of such centres.