SC-appointed Green Panel recommends high pollution cess of 20-22% on diesel vehicles

Jul 6, 2016 14:14 IST

The Environment Pollution (Prevention and Control) Authority (EPCA) on 5 July 2016 recommended a green cess of 20-22 percent on diesel vehicles.

EPCA is a Supreme court-appointed Green Panel for Delhi-National Capital Region (NCR).

Highlights of the recommendations

• The vehicles need to be divided into three categories- up to 1200 cc, up to 2000 cc and 2000 cc and above.
• An Environment Compensation Charge (ECC) of 10 percent of the vehicle's cost be imposed on diesel cars with engines up to 1200cc.
• EPCA recommended ECC of 20 percent tax on diesel vehicles with engines smaller than 1500cc in size.
• It recommended a cess of 22 percent on vehicles with engines over 1500cc.
• It also recommended high pollution cess of up to 25 percent on the cost of diesel cars above 2000 cc.
• The authority’s recommendation of 20 per cent (for less than 1500 cc) and 22 per cent (for over 1500 cc) green cess stands at 179766 rupees and 215883 rupees respectively.
• Diesel car users cannot pay less tax per litre of fuel compared to petrol car. This needs to be equalised to control growing use of low tax diesel fuel in cars that have cleaner substitutes.

Comment
If the EPCA’s recommendations are accepted, the cess for the present range of diesel vehicles in the national capital could translate to anywhere between 1-2 lakh rupees.

The main reason behind EPCA’s recommendation is to remove the existing incentive for buying diesel vehicles. Removing the fuel price differential, through the imposition of ECC will be a step in removing the incentive for diesel vehicles. This is needed to reduce public health risk.

The committee’s report is, however, not the last word on the environment cess on diesel vehicles as the Supreme Court is awaiting inputs of various stakeholders.

Background
In December 2015, the Supreme Court banned the registration of diesel-run SUVs and high-end cars with engine capacity of 2000CC and above in Delhi and NCR. The ban was initially instituted for a period of three months and was subsequently extended with no deadline.

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