Scrappage policy to offer 5 per cent cash rebate on new car purchase

MoRTH is all set to implement the Scrappage Policy from April 2022 that will affect private car users as well as commercial car owners. Read the following for more details on the recent development announced by the government

The Vehicle Scrappage Policy, which was announced with the Union Budget 2021 by the Finance Minister, Nirmala Sitharaman, is all set to be implemented in the country by April 2022. In a recent development, Transport Minister Nitin Gadkari has announced a 5 per cent cash rebate on a purchase of a new car as an incentive to encourage owners to scrap their old car.

Private vehicles older than 20 years and commercial vehicles older than 15 years will have to go through an automated fitness test. Vehicles that do not meet the set standards will not be registered with the Regional Transport Office (RTO). If the respective owners scrap such vehicles, they shall be entitled to a 5 per cent cash rebate on the purchase of a new vehicle.

The automated fitness test will be set up as a part of Public-Private-Partnership (PPP), as the government will assist private partners and state governments in terms of scrapping centres. The 20-year-old vehicles that do not comply with the fitness test will be penalised and impounded by the authority. 

Additionally, vehicles over 15 years of age will have to pay Green Tax at the time of renewal of Registration Certificate (RC). It could be as high as up to 50 per cent of the road tax in cities with higher levels of pollution. And while Green Tax charges will vary depending on the type of fuel, EVs will be exempted.

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