The Government of India (GoI) decided to have 25 % tax concession to vehicle owners on scrapping the old vehicle and purchasing new one.
The concession on tax would be given to them under the newly proposed vehicle scrapping policy. The new vehicle policy is a step to reduce pollution and to enhance air quality in India. Nirmala Sitharaman, the Union Finance Minister, during the Union Budget 2021-2022 announced the new amended Vehicle Policy. Under the new vehicle scrappage policy, old vehicles would be phased out with new ones. Vehicle owners need to scrap vehicles in 20 years for personal vehicles and 15 years in case of commercial vehicles.
A fitness test of the vehicle would be conducted after 20 years and 15 years, and need to scrap. The policy was approved on the 25th of January 2021 and will come into effect from the 1st of April 2021.
The concession would be given after the submission of scrappage certificate. The Road, Transport and Highways Ministry published the drafted rules regarding concession in motor vehicle tax. As per the guidelines, 25 percent concession is on the purchase of personal vehicles with vehicle scrappage certificate while on the purchase of commercial vehicles (bus, trucks, lorries,) the tax relief is 15 %. In addition, on personal vehicles, the tax concession is for 8 years and on commercial vehicles, it is for 15 years.
The period of 8 years and 15 years would be based on the date of first registration. The Central Government also asked for suggestions from various stakeholders on the draft rules within a period of 30 days from the 30th of March. The decision to provide concessions was given to boost the newly implemented Vehicle Scrapping Scheme.
In India there are 51 lakh vehicles in India which are older than 20 years, 34 lakh vehicles more than 15 years old and 17 lakh older than 15 years without renewed fitness certificate.
Meanwhile, the rules of concession would come into force from the 1st of October 2021.
Stay tuned for further updates.
