Government Gives Nod To Levy 'Green Tax' On Old, Polluting Vehicles; Revenue To Be Used For Tackling Pollution

The proposal will now go to the states for consultation before it is formally notified. The main principles to be followed while levying the Green Tax are: transport vehicles older than eight years could be charged Green Tax at the time of renewal of fitness certificate, at the rate of 10 to 25 per cent of road tax.

Union Road Transport and Highways Minister Nitin Gadkari has approved a proposal to levy a “Green Tax” on old vehicles, which are polluting the environment. The proposal will now go to the states for consultation before it is formally notified.  

The main principles to be followed while levying the Green Tax are: transport vehicles older than eight years could be charged Green Tax at the time of renewal of fitness certificate, at the rate of 10 to 25 per cent of road tax; personal vehicles to be charged Green Tax at the time of renewal of registration certification after 15 years; public transport vehicles, such as city buses, to be charged lower Green tax and higher Green Tax (50 per cent of Road Tax) for vehicles being registered in highly polluted cities.

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The other principles to be followed are: differential tax, depending on fuel (petrol/diesel) and type of vehicle; vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG etc. to be exempted; vehicles used in farming, such as tractor, harvester, tiller etc. to be exempted; revenue collected from the Green Tax to be kept in a separate account and used for tackling pollution, and for states to set up state-of-art facilities for emission monitoring

The benefits of the Green Tax could be to dissuade the people from using vehicles which damage the environment and to motivate the people to switch to newer and less polluting vehicles. Green Tax will also reduce the pollution level and make the polluter pay for pollution.

Gadkari also approved the policy of deregistration and scrapping of vehicles owned by the government department and PSU, which are above 15 years in age. This will come into effect from April 1, 2022.

It is estimated that commercial vehicles, which constitute about five per cent of the total vehicle fleet, contribute about 65-70 per cent of the total vehicular pollution. 

The older fleet, typically manufactured before the year 2000 constitute less than one per cent of the total fleet but contributes around 15 per cent of total vehicular pollution. These older vehicles pollute 10 to 25 times more than modern vehicles.