Green tax on vehicles older than 15 years

Why in News?

The Union Minister for Road Transport and Highways has approved a proposal to levy a ‘green tax’ on old vehicles. The policy will come into effect on April 1, 2022.

 What is Green Tax?

  • Green tax is also called pollution tax or environmental tax. It is the tax levied on goods that cause environmental pollution.
  • Purpose of Green Tax: The tax will discourage people from using vehicles that damage the environment. It will motivate them to switch to newer, less polluting vehicles and reduce the overall pollution level and make the polluter pay for it.

Government Green Tax Proposal:

How will the vehicles be taxed? The Green tax will be applied to the vehicles in the following categories:

  • Transport vehicles older than 8 years to be charged at the time of renewal of fitness certificate at the rate of 10-25% 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 tax.
  • Higher Green Tax of up to 50% of road tax for vehicles being registered in highly polluted cities like Delhi-NCR.
  • Differential tax depending on fuel (petrol/diesel) and type of vehicle.

Exemptions: The following vehicles will be exempted from the Green Tax proposal:

  • Strong hybrids, EVs, and vehicles that run on alternative fuels such as CNG, LPG, and ethanol.
  • Vehicles used in farming such as tractors, harvesters, and tillers.

How will the Green Tax be used?

  • Revenue collected from the green tax will be kept in a separate account. The amount will be used for tackling the problem of pollution.
  • The tax will also be used by states to set up state-of-art facilities to monitor the emission.

Source: Business Today

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