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  • 26 January, 2021

  • 8 Min Read

Green Tax

Green Tax

  • The Union Minister for Road Transport and Highways has approved a proposal to levy a ‘green tax’ on old vehicles.
  • Personal vehicles will be charged a tax at the time of renewal of Registration Certification after 15 years.
  • The policy will come into effect from April 1, 2022.


  • The levy may differ depending on fuel (petrol/diesel) and type of vehicle.
  • The proposal will now go to the States for consultation before it is formally notified.
  • It includes 10-25% of road tax on transport vehicles older than eight years at the time of renewal of fitness certificate.
  • The proposal on green tax also includes a steeper penalty of up to 50% of road tax for older vehicles registered in some of the highly polluted cities in the country.
  • Revenue collected from this tax will be kept in a separate account and will be used for tackling pollution, and for States to set up state-of-art facilities for emission monitoring.

Exemptions to Green Tax

  • Vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG etc to be exempted;
  • Vehicles used in farming, such as tractors, harvesters, tillers etc be exempted;

Positives of Green Tax

  • It will dissuade people from using vehicles which damage the environment
  • It will motivate people to switch to newer, less polluting vehicles
  • Green tax will reduce the pollution level, and make the polluter pay for pollution.

Other proposals

  • The Ministry also approved a watered-down policy of deregistration and scrapping of vehicles, bringing only those vehicles owned by government departments and PSUs and are older than 15 years under its ambit.
  • In 2016, the Centre floated a draft Voluntary Vehicle Fleet Modernization Programme that aimed to take 28 million decade-old vehicles off the road.

Source: PIB

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