Centre may ask states to levy more tax on older vehicles

india

Updated: Sep 27, 2019 00:22 IST

The Centre is likely to ask states to increase road taxes for older vehicles to make it harder for them to ply, according to officials aware of the development. This could be done in the form of a tiered structure, where the road taxes shift to a higher slab when ages of vehicles cross a pre-defined threshold of about 15 years.

Use of old vehicles are among the main reasons blamed for transport-generated pollution.

The states and the Centre levy road taxes for maintaining state or national highways, and they vary. The taxes are also levied when vehicles are bought. They are over and above the purchase prices and registration charges.

The officials cited about said as an incentive for scrapping older vehicles, the Centre will also advice states to lower road taxes for vehicles bought against scrapping.

Vehicle scrappage has been a long pending demand of the auto sector, which is currently facing a financial crisis. Last month, Union finance minister Nirmala Sitharaman announced the Centre will come up with a vehicle scrappage policy to aid the auto sector.

“States would be requested to alter road tax structures to make operation of older vehicles less attractive... States may also incentivise the scrapping of older vehicles by reducing the road taxes for the new vehicles purchased against scrapping certificates,” according to a draft policy note.

According to the draft, authorities would also be requested to order bans on entry of older commercial vehicles within limits of cities. It adds that if such vehicles are found to violate the restrictions, a steep penalty of about Rs 10,000 may be imposed to act as a deterrent.

The Union road transport and highways ministry has also proposed creation of a higher fee structure for issuing fitness certificate to discourage operation of older vehicles.

All electric and Internal Combustion Engine vehicles bought against a scrapping certificate would be exempted from payment of registration fee.