What is Green Tax? Know the proposal of Transport Ministry's Tax on over 8 years old Vehicles

New Delhi: The Union Minister for Road Transport and Highways Nitin Gadkari on Monday said his department has approved a proposal of 'green tax' on old vehicles. The proposal will go to the states for consultation before it is formally notified.

What is Green Tax?

According to the proposal, green tax will be imposed on transport vehicles older than eight years at the time of renewal of the fitness certificate — at the rate of 10-25 per cent of road tax. Personal vehicles will also be charged the same levy 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.

In the case of vehicles being registered in highly polluted cities, a higher green tax (50 per cent of road tax) and a differential tax, depending on the fuel (petrol/diesel) variant and type of vehicle, will be charged. Hybrids, electric vehicles, and alternative fuels, such as compressed natural gas, ethanol, and liquefied petroleum gas, will be exempted. Also, farm vehicles, such as tractors, harvesters, and tillers, will be exempted.

Revenue collected from green tax

The revenue collected from the green tax will be in a separate account and used for tackling pollution, and for states to set up facilities for emission monitoring, said an official statement.

Policy on Older Vehicle owned by Goverment

Gadkari also approved the policy of deregistration and scrapping vehicles owned by government departments and public sector undertakings above 15 years old. The proposal is to be notified and will come into effect from April 1, 2022.

It is estimated that commercial vehicles, which constitute 5 per cent of the total vehicle fleet, contribute 65-70 per cent of total vehicular pollution.

The older fleet, typically manufactured before 2000, constitutes less than 1 per cent of the total fleet, but contributes to 15 per cent of total vehicular pollution. These older vehicles pollute 10-25x more than newer vehicles, added the statement.