Thursday, February 04, 2021
By Manoj Kumawat
Vehicle Scrappage Policy: What is The Whole Fuss?
In the recently presented Union Budget Honourable Finance Minister N. Sitharaman announced the “Vehicle Scrappage Policy” for the old commercial and passenger vehicles. In the announcement, the Finance Minister detailed the policy and speculated that its implementation will offer the boost of Rs. 43,000 crore to the auto industry. Although at present the policy is under the draft mode and will be sent to the state governments for suggesting the necessary corrections, it has created a fuss among the Indian buyers. The future of the policy is although hidden in the future, there are some questions about its overall impact on the vehicle owners. Going through this concern we are highlighting some of the points related to the vehicle scrappage policy.
Which Vehicles Are Eligible for Voluntary Scrapping? According to the policy the passenger vehicles which more than 20 years old, and the commercial vehicles which are more than 15 years old will be required to undergo the voluntary scrapping. That means the passenger vehicles manufactured in 2000 will be required to be scrapped. It is also stated that these vehicles will have to undergo the fitness test and re-registration after the completion of 15 years. The vehicles will be tested in the automated fitness centres located at the different centres in the entire country. This test will ensure that whether it is safe to drive these vehicles on road. If they fail in the test for more than three times, they will eligible to be sent for scrapping.
Will Government Offer Any Subsidy or Incentives to These Vehicles? At present no such announcement has been made by the government. Because the government wants to keep its vehicles separate from the policy of subsidy or incentives. However, according to the proposal, the customers will be offered incentives like discounts in the registration or road tax on the purchase of the new vehicle.
What Will be the Cost of Re-registration and other taxes: If the proposal comes in the practice then the cost of re-registration would be 25 times higher for the vehicles that are more than 15 years old. It means, that these vehicles will have to pay Rs. 25,000 for the re-registration as against Rs. 200 they are paying at present. Similarly, the re-registration cost of the cars would be Rs. 15,000 as opposed to Rs. 600 charged at present. As far the two and three-wheelers are concerned the re-registration cost would be between Rs. 2,000 – Rs. 3,000. The government also plans to impose Green Tax on such vehicles at the time of their re-registration.
What is a Green Tax? Green tax is not new for the vehicle owners residing in Maharashtra and Delhi, as these states are already charging the green tax or Environment Compensation Charge (ECC) on the vehicles which are more than 15 years old. In Maharashtra, the petrol car owners are paying Rs. 3,000 as a Green Tax, whereas the diesel car owners are paying Rs. 3,500 for the Green Tax. The same tax for the two-wheelers is Rs.2,000. The Green Tax for on the commercial vehicles is charged after eight years.