LG gives nod for tax discounts on scrapping old vehicles

Delhi lieutenant governor VK Saxena has approved a proposal that provides a discount ranging between 10-20% on motor vehicle tax to people purchasing a new vehicle, if their older automobile is scrapped, people aware of the development said on Tuesday.
The proposal, floated by the Delhi government in July, will come into effect from the date of the notification, the people said. The discount will only be provided if the buyer provides a certificate confirming the scrapping of the older vehicle, and the concession can range from 10-20%, depending on the vehicle’s fuel type, they said.
“The discount is one of the many measures that the Delhi government has taken to promote the use of clean, non-pollution vehicles in the Capital. The discounts will make the purchase of vehicles cheaper, thus it will encourage the scrapping of old, polluting vehicles,” transport minister Kailash Gahlot said.
Motor vehicle tax in Delhi ranges from 4% to 12.5% on the ex-showroom price of the vehicle. The tariff can depend on the vehicle’s fuel type as well as the size and ex-showroom price of the vehicles.
For example, if a person buys the base petrol version of Tata Nexon (ex-showroom price: ₹8 lakh), they will have to pay motor vehicle tax of 7%. Thus, if they have scrapped a vehicle for ₹50,000, they can get a rebate of ₹11,200.
However, the base diesel version of Tata Nexon (ex-showroom price: ₹10.5 lakh), they will have to pay motor vehicle tax of 12.5%, and the rebate is ₹16,406.25.
According to orders issued by the National Green Tribunal (2015) and the Supreme Court (2018), no vehicle which is 15 years old or more can operate on the roads of the national capital. For diesel vehicles, this time period is cut down to 10 years only. The government calls such vehicles “end-of-Iife” vehicles, and driving them in Delhi is illegal. The aim behind these rules is to cut down on the number of vehicles on the city’s roads with dated emission standards.
The Delhi government proposal is based on the vehicle scrapping policy of the Union ministry of road transport and highways, notified in 2021, which advised state governments to offer a road tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles to people who scrap their older vehicle.
In July, the Delhi transport department sent its proposal to Saxena for consideration and approval, and the LG passed the file recently.
“The LG has approved the proposal to provide concession in the motor vehicles tax on registration of new transport and non-transport vehicles, against the scrapping of old vehicles, provided that the certificate of scrapping from registered vehicles scrapping facility (RVSF) is provided. A notification will be issued in a couple of days. The concession will come into effect from the date on which the notification is issued,” said a Delhi government official.
According to the new policy, the concession cannot exceed 50% of the scrap value of the older vehicle — this means that if the scrap value of the older vehicle is ₹50,000, then the concession to the buyer can’t be more than ₹25,000.
Anumita Roychowdhury, executive director (research and advocacy) at Centre for Science and Environment, said, “This incentive can enable proactive decision of the vehicle owners to replace old vehicles with new vehicles. As old vehicles emit several times more than the new vehicles, substantial emission reduction is possible.”