Green tax on vehicles older than 15 years

Green tax on vehicles older than 15 years

The Union Minister for Road Transport and Highways, Nitin Gadkari, has approved the proposal to levy a ‘green tax’ on vehicles aged fifteen years or older as part of efforts to promote electric vehicles in the country. The policy will come into effect from April 1, 2022, and is aimed at encouraging people to move towards electric vehicles. 

What is Green Tax?

Green tax is also called pollution tax or environmental tax. It is the tax levied on goods that cause environmental pollution. For example, a car or a house that leaks oil will be subject to higher standard levies than an identical one without any leakages.

Green tax helps to finance the cost of environmental protection and clean-up. The government can use green tax to help regulate polluters by setting standards for various pollutants produced by them in order to enable more efficient use of resources so as not to create additional air, water, or land pollution.

The tax will discourage people from using vehicles that damage the environment. It will motivate them to switch to newer, less polluting vehicles and reduce the overall pollution level and make the polluter pay for it.

Government Green Tax Proposal

The Green tax will be applied to the vehicles in the following categories:

1. Transport vehicles older than 8 years to be charged at the time of renewal of fitness certificate at the rate of 10-25% of road tax.
2. Personal vehicles to be charged Green Tax at the time of renewal of Registration Certification after 15 years.
3. Public transport vehicles such as city buses to be charged lower tax.
4. Higher Green Tax of up to 50% of road tax for vehicles being registered in highly polluted cities like Delhi-NCR.
5. Differential tax depending on fuel (petrol/diesel) and type of vehicle.

Exemptions from the Green Tax

The following vehicles will be exempted from the Green Tax proposal:

1. Strong hybrids, EVs, and vehicles that run on alternative fuels such as CNG, LPG, and ethanol.
2. Vehicles used in farming such as tractors, harvesters, and tillers.