Vehicle Scrappage Policy

Vehicle Scrappage Policy

The vehicle scrappage policy was initiated by the Finance Minister in the Union Budget 2021-22. The Transport Ministry announced the vehicle scrappage policy recently following a move to impose a green tax on old and polluting automobiles. The move promises economic benefits, a clean environment and thousands of jobs.

Policy objectives:

  • The policy aims to create an ecosystem to reduce pollution, and to get out of our old and, unfit vehicles that cause pollution.It also has to improve the safety of roads and vehicles in the country. This is expected to give an impetus to the automobile industry, which was already down before the COVID-19
  • In the long run, the policy is expected to increase the fuel efficiency of vehicles, increase the availability of low-cost raw materials for the automotive, electronics and steel industries, and increase the government’s Goods and Services Tax (GST) revenue. The plan currently seeks to formalize the informal vehicle scraping industry.

Provision of vehicle Scrappage policy:

  • The policy provides for scrap commercial vehicles over 15 years old and, for private vehicles over 20 years old.
  • The policy will first start with commercial vehicles and, later, will be extended to private vehicles.
  • Older vehicles must pass a fitness test before re-registration.
  • The old vehicles will be tested at Automated Fitness Centers and the fitness testing of the vehicles will be done as per international standards.
  • To encourage scraping of older vehicles, the policy proposes a lower GST of 5%.Or In lieu of 28% on commercial vehicles, a complete rebate is currently levied on commercial vehicles and those carrying more than 10 persons.
  • All government and PSU owned vehicles will be de-registered after 15 years.
  • With a scraping certificate, one can also avail a 5 percent manufacturer-discount and, while purchasing a new vehicle, can also get a waiver in the registration fee.
  • From April 1, 2022, the policy for government vehicles will come into force.
  • Compulsory fitness testing for heavy commercial vehicles will begin from 1 April 2023.
  • For all other categories of vehicles, including private vehicles, it will start in phases from June 1, 2024.

Other initiatives to prevent vehicle pollution:

  • National Electric Mobility Mission: 2020
  • Fame India Scheme: Phase2
  • Delhi Government Electric Vehicle Policy
  • Hydrogen Fuel Cell Electric Bus Project

Source – PIB

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