Buying new vehicles by scrapping old vehicles will get tax exemption, know what is the plan?

Buying new vehicles by scrapping old vehicles will get tax exemption, know what is the plan?

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New Delhi: The government will soon issue rules for deducting road tax on a new vehicle purchased after scrapping an old vehicle, making it mandatory for the state governments to implement it. Union Road Transport Minister Nitin Gadkari has also urged the auto sector to consider an additional 5 per cent exemption on the basis of scrapping certificate for an old vehicle, which will help the government to scrap the vehicle. The policy will increase the demand for autos in the country.

Addressing the media on the vehicle scrappage policy, Gadkari said on the issue of road tax relief, “There are three lists in the Constitution: Central List, State List and Concurrent List. Our subject comes in the Concurrent List, which gives us the right to make laws, which we have done.

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Rules will be issued soon
An official of the Union Road Transport Ministry further clarified that the government has the power to take decisions as per the concurrent list to bring down the road tax. The rules have been changed under the provisions. Final rules will be notified soon. The government had earlier proposed a reduction of up to 15 percent in road tax for commercial vehicles and up to 25 percent for personal vehicles.

Vehicle sales will increase by 25 to 30 percent
Nitin Gadkari said that “The revenue of the state government will also increase with the scrap policy as it will increase the sales of vehicles by at least 25 – 30 percent. Half the GST on the sale of autos will be given to the state governments. We need to implement this policy in collaboration with the state governments. Our aim is to reduce pollution, create better growth and create more jobs. This is an issue of public interest and I hope all state governments will cooperate with the Center on this issue.

5 percent discount can be available
Gadkari further said that there will be no revenue loss under this policy. The government will get tax on buying a new vehicle by scrapping the old vehicle. It is a win-win policy for both the central and state governments,” Gadkari also urged the auto sector to give 5 per cent rebate to those who buy a new vehicle after dismantling the old vehicle.

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Gadkari also said that every district will have one scrapping center and in high-population districts, five scrapping facilities can be set up. “If we do not have scraping facility every hundred kilometres, then it will not be financially sound to take the vehicle to the scrapping centre,” Gadkari said, adding that the scrapping business would offer a rate of return of 18%.

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