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What You Need to know About Green Tax for Automobiles

Air pollution from automobiles also called vehicular pollution has become a major cause of concern for human health and ecology in India. A recent study reveals that commercial vehicles contribute close to 70% of the total vehicular pollution and vehicles manufactured before 2000 pollute 10x to 25x more than newer vehicles. To curb this, the Ministry of Road Transport and Highways has given the nod to levy Green Tax on automobiles. Here’s what you need to know about Green Tax.

The Green Tax Proposal

As per the proposal, the tax will be applicable for both private and commercial vehicles. But the tax rate will vary depending on the fuel type and vehicle. For passenger/commercial vehicles that are more than 8 years old, a Green Tax could be charged at the time of renewing the fitness certificate. The tax rate could be anywhere between 10% - 25% of the road tax. For personal vehicles that are more than 15 years old, the Green Tax could be levied at the time of renewing the registration certificate. The tax rate could shoot up to 50% on the road tax if you are residing in a highly polluted city.

This is not a new concept for vehicle owners residing in Maharashtra and Delhi. Both the regions are already levying a Green Tax or Environment Compensation Charge (ECC) on private vehicles that are more than 15 years old and commercial vehicles that are more than 8 years old. The tax amount is as follows:

Vehicle Age

Vehicle Type

Fuel Type

Tax Amount

More Than 8 Years

Private

Petrol

Rs. 3,000/-

More Than 8 Years

Private

Diesel

Rs. 3,500/-

More Than 8 Years

Two Wheelers

Petrol

Rs. 2,000/-

More Than 15 Years

Light Commercial Vehicles

Diesel

Rs. 2,500/-

More Than 15 Years

Six-seater Taxis

Diesel

Rs. 1,250/-

More Than 15 Years

More Than 7500 kg capacity

NA

10% Of Annual Tax

More Than 15 Years

Service Vehicles

NA

2.5% Of Annual Tax

More Than 15 Years

Contract Buses

Diesel

2.5% Of Annual Tax

More Than 15 Years

Tourist Buses

Diesel

2.5% Of Annual Tax

 

The idea here is to dissuade vehicle owners from owning older vehicles that pollute more. Levying more tax will discourage the use of old vehicles and make them shift to newer, less polluting vehicles resulting in lower pollution levels.

Exemptions

Green tax favours vehicles such as hybrids,  electrics (EVs), and alternative fuels like CNG, LPG and Ethanol. They are likely to be exempted from paying Green Tax. Farm vehicles such as tractors, harvester, tiller, etc. are also likely to be exempted from Green Tax.

The Ministry of Road Transport and Highways will send the proposal to all the States and Union Territories for consultation before being implemented. The revenue collected from the Green Tax will be kept in a separate account and will be used for tackling pollution and setting up state-of-the-art emission monitoring facilities.

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