Keeping an old vehicle road-legal could soon become a dearer affair. How? The government is in the final stages of levying an extra cess called ‘Green Tax’. This will apply to “old vehicles” which “are polluting the environment”. All that sounds a bit vague, doesn’t it? Well, the finer details are still under wraps. But, to give an idea of how it could impact, here’s what you should know:

1. A Green Tax varying between 10 to 25 per cent of road tax could be charged at the time of renewal of fitness certificate. This is for transport vehicles older than eight years.
2. The proposal asks for a lower Green Tax on public transport vehicles, such as city buses.
3. Vehicles used for personal use will also pay Green Tax. Owners will have to pay that when they take their rides to renew Registration Certification after 15 years.
4. The government could ask for a higher green tax (50 per cent of road tax) for vehicles registered in highly polluted cities, such as New Delhi and Mumbai.
5. A differential tax regime might come into play – the cess will depend on the type of vehicle and what fuel it runs on (petrol/diesel).
6. Strong hybrids (HEV and PHEV), pure-electric vehicles and those running on alternative fuels such as CNG, LPG, ethanol etc., will be exempted.
7. Vehicles used for farming purposes, like tractors and harvesters, will be excused from paying any Green Tax.

So, what will happen to all the revenue collected under Green Tax? It will be kept in a separate account and used for pollution-curbing initiatives, such as emissions monitoring facilities across the country. And, why has the government decided to levy this additional cess in the first place? It will discourage people from using polluting vehicles and motivate them to switch to newer ones which comply with the stricter emission norms. In other words, the tax will help reduce air pollution and make those pay who continue to use old vehicles.

The government has done some research to support the implementation of Green Tax. It estimates that commercial vehicles, which account for approximately 5 per cent of the country’s total vehicles, contribute to 65-70 per cent of total vehicular pollution. Those produced before the year 2000 constitute less than 1 per cent of the whole fleet. But, they account for nearly 15 per cent of the total vehicular pollution. It goes on to mention that “these older vehicles pollute 10-25 times more than modern vehicles”.

Nitin Gadkari, the Union Minister of Road Transport and Highways, has approved Green Tax. The proposal will now go to the state governments for consultation before it is formally notified. The minister has also given the go-ahead on deregistering and scrapping vehicles (older than 15 years) owned by government departments and PSUs. That will come into effect from April 1, 2022.

What do you think of the ‘Green Tax’ initiative? Do you think it will work?