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‘Green Tax’

Published: 1st Feb, 2021

‘Green Tax’

The Transport Ministry has approved a proposal for a ‘green tax’ on old vehicles.


The Transport Ministry has approved a proposal for a ‘green tax’ on old vehicles.


  • What is Green Tax?
  • Green Tax aims to curb pollution and motivate people to switch to environment-friendly alternatives.
  • The tax has been proposed to dissuade people from using vehicles that damage the environment, motivate them to switch to newer, less polluting vehicles and to reduce overall pollution level and make the polluter pay for it.
  • 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.

Polluting vehicle

  • Commercial vehicle: It is estimated that commercial vehicles, which constitute about 5 per cent of the total vehicle fleet, contribute about 65-70 per cent of total vehicular pollution.
  • Older fleet: The older fleet, typically manufactured before the year 2000 constitute less that 1 per cent of the total fleet but contributes around 15 per cent of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles.

Who will be charged under the tax?

  • The proposal is to levy a ‘green tax’ on old vehicles that are polluting the environment.
  • Vehicle older than 8 years: Transport vehicles older than eight years can be charged at the time of renewal of fitness certificate, at the rate of 10-25% of the road tax.
  • Personal vehicles: Personal vehicles will be charged at the time of renewal of their registration certificate after a period of 15 years.
  • Public transport: The ‘green tax’ will be lower for public transport vehicles like city buses, but the rate will be higher for vehicles being registered in highly polluted cities.
    • In such instances, the rate will be 50% of the road tax.
  • Exemption: Vehicles like strong hybrids, electric vehicles and alternative fuels like CNG, ethanol, LPG will be exempted.

Pollutants produced by vehicle exhausts

  • Carbon monoxide, hydrocarbons, nitrogen oxides, particles, volatile organic compounds and sulfur dioxide.
  • Hydrocarbons and nitrogen oxides react with sunlight and warm temperatures to form ground-level ozone.
  • Ground-level ozone, a main ingredient in smog, can cause upper respiratory problems and lung damage.

What about ‘Scrapping policy’?

  • The Ministry also approved a policy of deregistration and scrapping of vehicles owned by government departments and PSUs, which are above 15 years in age.
  • The policy will come into effect from April 1, 2022.
  • A broader scrappage policy for commercial vehicles is awaited and is likely to be announced during this year's Budget next week.

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