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Vehicle Scrappage Policy: Rebate on Road Tax, Discounts and Scrap Value: All You Need to Know

The new Toyota stockyard in Guwahati. (Photo: Toyota)

The new Toyota stockyard in Guwahati. (Photo: Toyota)

The Scrappage Policy is touted as a major step to boost the Indian automobile sector, reeling under the adverse impact of the COVID-19 pandemic.

Union minister Nitin Gadkari has presented an outline of the upcoming vehicle scrappage policy in Lok Sabha today. As per Nitin Gadkari, the much awaited Scrappage Policy will not only boost the economy by removing older vehicles and putting newer ones on the road, but will also help in curbing pollution by taking polluting vehicles off the road. The policy will be notified in a period of one month or so, and ahead of the final rollout, here’s the key takeaways from the Gadkari’s presentation:

1) A vehicle will have to go mandatory fitness test once the registration of the vehicle ends

2) The age of the vehicles is kept 15 years for commercial vehicles and 20 years for personal vehicles

3) If a vehicle fail to pass the fitness test, it will be deemed ‘an-end-of-life’

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4) Vehicle owners will be encouraged to scrap the vehicles at the end of vehicles life rather than take a fitness test and renew registration

5) Vehicle re-registration fees will be increased to discourage people from running old vehicles

6) Automated fitness centres will be established throughout the country to ease scrapping

In order to lure owners into scrapping their vehicles, Gadkari has suggested following ways:

1) A scrap value of the ex-showroom price of vehicle ranging from 4-6% will be given to the owner if they choose to scrap the vehicle

2) A rebate of upto 25% will be given in Road Tax

3) Vehicle manufacturers will be advised to give 5% discount on new vehicles against a scrapping certificate

So in total benefits of upto 10-15% can be availed on the older vehicles, who have reached the end of their lifecycle. The voluntary vehicle scrapping policy was first announced in the Union Budget for 2021-22 and will be implemented in a calibrated manner starting 2022 on select vehicles.

“There are four major components of the policy – Apart from rebate, there are provisions of green taxes and other levies on old polluting vehicles. These will be required to undergo mandatory fitness and pollution tests in automated facilities. For this automated fitness centres would be required through out in the country and we are working in that direction,” Gadkari said.

Automated fitness tests will be set up under public private partnership (PPP) mode while the government will assist private partners and state governments for scrapping centres, he said. Driving such vehicles that fail to pass automated tests will attract huge penalties and also be impounded, the minister said. This policy is going to be a boon for the automobile sector, making it one of the most profitable sectors which in turn would generate huge employment, the minister said.

The policy is touted as a major step to boost the Indian automobile sector, reeling under the adverse impact of the COVID-19 pandemic. The minister said it would lead to a 30 per cent boost to the Indian automobile industry turnover to Rs 10 lakh crore in the years to come from the present about Rs 4.5 lakh crore.

These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles. The government had earlier said it plans to impose green tax on old polluting vehicles soon in a bid to protect the environment and curb pollution while vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG will be exempted. The revenue collected through the green tax will be utilised for tackling pollution.

With Inputs from PTI

first published:March 18, 2021, 14:09 IST