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What is Green Tax?

Revenue collected through the tax will be used for tackling pollution.

With rising alarms around climate change, Governments around the world are scrambling to come up with solutions to cut this Gordian knot. India has some of the most polluted cities in the world. Consequently, air pollution seems to be a bearer of quite a lot of nuisance starting from deteriorating air quality to health issues and fog.

The Ministry of Road Transport and Highways has taken a step to combat this issue. Sh. Nitin Gadkari, the Union Minister of Road and Highways, has approved a proposal to levy a “Green Tax” on old vehicles which are polluting the environment. Keeping the extra charges of Green Tax in mind is essential if you are planning to invest in a vehicle, be it a brand new or used one, in the near future.

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The Main Principles to Be Followed While Levying the Green Tax Are :

Transport Vehicles over 8 years might be charged with a tax of around 10-25% of road tax whereas personal vehicles might be charged with this tax during the renewal of registration after 15 years. Higher Green tax (50% of Road Tax) for vehicles being registered in highly polluted cities. Differential tax, depending on fuel (petrol/diesel) and type of vehicle.

Exceptions :

There are certain exceptions under this proposal including farm vehicles, electronic vehicles, strong hybrids and vehicles which run on low emission fuels like CNG, LPG and ethanol etc. Public transport vehicles are also proposed to be charged at a lower rate under this system.

Older vehicles are the target of this tax as their pollution emissions increase year-on-year with their declining quality. The Government hopes to decrease pollution level and see fewer older vehicles on road with the implementation of this tax.

Benefits :

Encouraging newer, less polluting vehicles is the goal of this tax to bring positive results in the fight against climate change and make the polluter pay for pollution.

Separate Account :

All the tax collected under this system will be kept in a separate account to be utilized specifically for combating pollution. This tax will be formally notified once all the consultations with the states and official procedures are completed.

The Minister also approved the policy of deregistration and scrapping of vehicles owned by Government department and PSU, which are above 15 years in age. It is to be notified, and will come into effect from 1st April, 2022.

Contribution Estimates :

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

So, If you are planning to add a vehicle to your expenditure list this year, it might be a good option to prefer newer technology and less polluting vehicles.

Furthermore, the demands of electric vehicles are only increasing in various countries. Norway, as a matter of fact, has sold close to 50% EVs out of its total sales of vehicles in the year 2020. Whereas, EV manufacturers are eyeing the Indian market for their next big opportunity.

What do you think?

Written by Prerna

A purple soul with a love for all things creative especially acting. I believe that current affairs, comedy and drama are interesting. I will forever be an inquisitive person striving for new knowledge. I like to write to express my views because words are powerful.

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