Centre proposes ‘green tax’ on older, polluting vehicles

The Union Ministry for Road Transport and Highways has approved a proposal to levy a “green tax” on old vehicles which are polluting the environment. The proposal will go to the states for consultation before it is formally notified.

The new proposal by the Nitin Gadkari-led ministry states that transport vehicles older than 8 years could be charged a Green Tax at the time of renewal of fitness certificate, at the rate of 10 to 25 % of road tax. Meanwhile, personal vehicles would be charged at the time of renewal of Registration Certification after 15 years.

Public transport vehicles, such as city buses, will be charged a lower green tax, while a higher amount (50% of road tax) will be for vehicles being registered in highly polluted cities.

Taxation of vehicles will also depend upon the type of fuel that they are using, the cleaner the fuel the lesser the tax. On the other hand, strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG, etc, will be exempted. The Government has also said that vehicles used in farming, such as tractor, harvester, tiller etc. will also be exempted. The revenue collected from this will be kept in a separate account and used for tackling pollution, and for states to set up state-of-the-art facilities for emission monitoring.

The Road Transport ministry says these new charges will dissuade people from using vehicles which damage the environment and motivate people to switch to newer, less polluting vehicles. “It will reduce the pollution level and make the polluter pay for pollution,” said the Ministry notification.

Union Minister for Road Transport and Highways Nitin Gadkari also approved the policy of deregistration and scrapping of vehicles owned by Government department and PSU, which are above 15 years in age. This will come into effect from 1 April, 2022.

It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet, contribute about 65-70% of total vehicular pollution. The older fleet, typically manufactured before the year 2000 constitute less than 1 % of the total fleet but contributes around 15% of total vehicular pollution. These older vehicles pollute 10-25 times more than their modern counterparts.