Green Tax coming for older vehicles

The Ministry of Road Transport and Highways has given its nod to a proposal to levy a Green Tax at 10-25 per cent for commercial vehicles that are over eight years old and personal vehicles of over 15 years. The proposal will now go to the States for consultation before being formally notified.

Simply put, cabs and trucks used for commercial purposes will have to pay a higher tax after eight years.

According to an official statement, Nitin Gadkari, Minister for Road Transport and Highways, has also approved the policy of de-registration and scrapping of vehicles that are over 15 years old owned by government departments and public sector undertakings. Once notified, it will come into effect from April 1, 2022.

Transport vehicles older than eight years could be charged the Green Tax at the time of renewal of fitness certificate, at 10-25 per cent of the road tax, and personal vehicles will face the levy at the time of renewal of registration certification after 15 years, the statement said, adding that depending on fuel (petrol/diesel) and type of vehicle, the tax will be levied.

The taxation regime favours non-diesel, non-petrol vehicles. For instance, vehicles like ‘strong hybrids’ (that can run fully on electric, or full internal combustion engine or a combination), electric vehicles and alternative fuels like CNG, ethanol, LPG will be exempted.

Vehicles used in farming, such as tractors, harvesters and tillers, and public transport vehicles, such as city buses, will be charged a lower Green Tax, while a higher levy (50 per cent of road tax) is proposed for vehicles being registered in highly polluted cities, said the release.

The revenue collected from this tax will have to be sequestered in a separate account and used for tackling pollution, and for States to set up state-of-art facilities for emission monitoring.

“The industry is not clear on the proposal yet, as there are points like ‘higher Green Tax (50 per cent of road tax) for vehicles being registered in highly polluted cities’. So, we need to get the details of what the definition of ‘highly polluted cities’ is,” an auto industry tax, said SP Singh, Senior Fellow, Indian Foundation of Transport Research and Training.