Centre to ask states to offer up to 25% road tax rebate under new vehicle scrappage policy

Union Road Transport Minister Nitin Gadkari has said that his ministry will ask state governments to provide up to 25 per cent rebate on road tax for vehicles that are purchased after scrapping old vehicles under the new proposed scrappage policy.

Though there is no clarity on the quantum of road tax rebates that would be made mandatory under the National Automobile Scrappage Policy, the Minister told media here that the issues related to the road tax rebate are a subject under the central government.

Read | How the new vehicle scrappage policy may affect you

In March, Gadkari told Parliament that state governments may be advised to offer a road tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles.

"As far as road tax(rebate) is concerned, it is not an advisory, we are going to make changes in the rules (to provide road tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles on buying new cars on scrapping old vehicles)," Amit Varadan, Joint Secretary in the Ministry of Road Transport and Highways, said at a press conference.

Also Read | Auto scrappage policy will boost vehicle sales, create jobs: Nitin Gadkari

Vardan also emphasised that the central government has the power to decide principles of taxation in the concurrent list.

While admitting that some states have expressed concerns over the proposed rebates, Varadan said the ministry successfully convinced those states to offer a road tax rebate of up to 25 per cent and 15 per cent for personal vehicles and commercial vehicles, respectively, under the scrappage policy.

Announced in the Union Budget 2021-22, the policy provides for fitness tests after 20 years for personal vehicles, while commercial vehicles would require it after the completion of 15 years.