Nitin Gadkari announces vehicle scrappage scheme with 25 % waiver on road tax

Minister of Road Transport and Highways – Nitin Gadkari has announced the vehicle scrappage policy in Lok Sabha. The minister announced the details of the voluntary scrappage scheme for vehicles older than 15 years in the country. The new policy will encourage car owners to scrap their ageing vehicles and replace them with brand-new ones. The aim is to reduce pollution and boost the automobile market.

The new scrappage policy will come into effect only from 1st June 2024. The government is also planning to make the fitness test mandatory for most cars and SUVs. The Ministery of Road Transport and Highways (MoRTH) has advised automobile manufacturers to provide a 5% discount on the purchase price of a new car for anybody who scraps the old vehicle first.

The MoRTH has also asked the state governments to waive off the registration fee on the new vehicle to such customers. While the exact policy laws are yet to be drafted, the state government can be advised to offer up to 25% rebate for personal vehicles and 15% discount for commercial vehicles on the road tax. The customers who will scrap their vehicles will also get about 4 to 6% of the original ex-showroom value of the scrapped vehicle. For heavy commercial vehicles, fitness tests will become mandatory from 1st April 2023.

Gadkari has also requested Finance Minister Nirmala Sitharaman to consider a GST cut for such vehicles that will further bring down the price of the cars for the customers who have scrapped their vehicle. Sitharaman is yet to respond to the request officially.

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A win-win situation for all: Gadkari

Gadkari says that scrapping of the vehicles will also increase the recycling of the car parts and will reduce waste. To make it difficult for the current owners to keep a vehicle older than 15 years, Gadkari has also proposed additional laws. The centre will make the re-registration of any vehicle after 15 years quite expensive and the fee will be much higher. Increase in RC and fitness certificate renewal fee for personal and commercial vehicles respectively while there is also a penalty for delay in renewal of certificates.

The government will also levy an additional Green Tex on the old vehicles that will further increase the operational cost. All the vehicles will have to go through the mandatory automated fitness test. The vehicles that will fail will be deregistered automatically. The owner of the old vehicle can take the car to any authorised scrapping centre across India. It does not have to be the home state or the place of registration. However, the government has clearly mentioned that stolen vehicles will not be allowed. There are no details on how they will prevent the thieves though.

The government and PSU-owned vehicles, automobiles damaged in fire, riots or any other devastation, vehicles declared defective by manufacturers, and the vehicles confiscated by enforcement agencies will be automatically scrapped.

The policy will come into effect by 2024. Before that, the rules for fitness and scrapping centres will come into effect from October 1, 2021. The government and PSU vehicles older than 15 years old will be scrapped from April 1, 2022. The government will make it mandatory for fitness testing for commercial vehicles from April 1, 2023.

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