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auto | IST

States to provide up to 25% discount on road tax on new purchase after scrapping old vehicle: Nitin Gadkari

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Speaking at the press conference, Gadkari said that the government has communicated to the states to lower road tax in order to encourage people to scrap their old vehicles.

States will be mandated under the scrappage policy to lower the road tax by up to 25 percent on the purchase of new vehicles after scrapping an old vehicle, road transport and highways minister Nitin Gadkari has said.
Speaking at the press conference, Gadkari said that the government has communicated to the states to lower road tax in order to encourage people to scrap their old vehicles.
The states will be free to set the percentage of discount but the upper limit of the discount has been fixed by the central government.
As per the final rules which are ready to be notified, the central government has now mandated states to lower road tax by up to 25 percent for personal vehicles and lower road tax by up to 15 percent for commercial vehicles, officials added.
"We have taken a legal view in the matter. As part of the concurrent list, we are authorised to decide on the principle of taxation. So, this will be notified in the final rules, they should be out soon," a senior government official said.
While several states are onboard the plan to lower road tax, others have shown hesitation, the official added.
The government plans to notify final rules of the vehicle scrappage policy by the end of September, officials said.
The much-awaited voluntary vehicle fleet modernisation program or scrappage policy was launched by the Road Transport and Highways Minister Nitin Gadkari in Lok Sabha in March of 2021.
Prime Minister Narendra Modi launched the policy on August 13 via video conference at an Investor Summit in Gujarat.
The summit was organised by the ministry of road transport and highways to invite investment for setting up vehicle scrapping infrastructure under the Vehicle Scrapping Policy. It also focussed on the potential of the ship breaking industry at Alang, for development of an integrated scrapping hub.
The Vehicle Scrapping Policy is aimed at creating an eco-system for phasing out unfit and polluting vehicles in an environment-friendly manner. The policy intends to create scrapping infrastructure in the form of Automated Testing Stations and Registered Vehicle Scrapping Facilities across the country.