After the Union Budget 2021 was presented, you might have heard the word “scrappage” and “vehicle scrapping” being bandied about. But what exactly does it mean, and is your vehicle at risk?
What is the vehicle scrappage policy?
Ever heard the phrase “Out with the old, in with the new”? That is exactly what the new vehicle scrappage policy is. To reduce pollution and promote the use of new, electric, eco-friendly, fuel-efficient vehicles, the government of India announced that old commercial vehicles that are over 15 years can be voluntarily scrapped to purchase a new one.
Benefits of this policy
- The newer cars that appear in the market are more fuel-efficient, equipped with BS6 compliant engines that reduce the emission of harmful chemicals, so it helps reduce the number of pollutants each vehicle emits.
- Newer vehicles come into the market equipped with better features.
- When newer vehicles with better features come into the market, it makes for safe and a more efficient commute.
- Authorised scrapping facilities will be put in place. These units will work towards scrapping and recycling the parts from the old vehicles.
How does this policy benefit you?
- In return for the scrapping of your old vehicle, the government of India will offer you tax-based benefits on the purchase of your new vehicle.
- There is also a proposed discount on the purchase of your new vehicle.
- The working parts of your vehicle can be sold by your dealer, for which you can negotiate the best price possible.
Things to keep in mind when scrapping your vehicle
- If your vehicle is over 15 years and you’ve decided to scrap it, you will have to inform your RTO of your decision.
- Once you scrap your vehicle, your dealer will give you the chassis number of the vehicle as proof that it has been scrapped. It is also useful to take a picture of the vehicle after it has been scrapped to make sure that it is not used for illegal activities.
- You will then have to notify your RTO and cancel your vehicle’s RC. This is to ensure that the documents of the vehicle aren’t used for misuse or fraudulent activities.
You will also have to inform your insurance provider of the scrapping of your vehicle. Based on your requirement, you can either transfer your motor insurance from the old vehicle to the new one or cancel your insurance policy and buy a new one that meets your requirements. You can also contact your insurance provider to find out what you will need to do.