What It Means For Present Automotive Homeowners


The announcement of the Automobile Scrappage Coverage was one of many highlights for the auto sector in 2021 Union Funds speech. However how does it have an effect on you – the Indian automotive proprietor? We reply your queries and considerations.

Details of the vehicle scrappage policy are expected to be announced sometime later this year

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Particulars of the car scrappage coverage are anticipated to be introduced someday later this 12 months

The ‘Automobile Scrappage Coverage’ has been beneath growth for a protracted interval, and we did see some conclusive particulars within the 2021 Union Funds speech made by Finance Minister Nirmala Sitharaman. The FM revealed quite a lot of particulars in regards to the upcoming coverage that’s anticipated to supply a giant enhance to the tune of ₹ 43,000 crore to the auto sector. That being mentioned, the ultimate coverage is but to be introduced and opens room for quite a lot of questions and considerations. Whereas we count on extra readability with the official announcement someday later this 12 months, we reply a couple of queries in regards to the upcoming Automobile Scrappage Coverage and the way it will have an effect on you – the automotive proprietor.

Additionally Learn: Union Funds 2021: Voluntary Automobile Scrappage Coverage To Be Introduced Quickly


Automobiles outdated than 20 years and industrial automobiles older than 15 years will likely be eligible for voluntary scrapping

Which automobiles will likely be eligible for voluntary scrapping?

Underneath the proposed car scrappage coverage, passenger automobiles older than 20 years and industrial automobiles outdated than 15 years will likely be eligible for voluntary scrapping. In essence, passenger automobiles inbuilt 2000 are eligible to be scrapped beneath the proposed coverage. That being mentioned, the automobiles will nonetheless should bear a health check and re-registration on the finish of the 15-year cycle. The federal government will set-up extra automated health centres throughout India to check if the car is match for the highway or must be despatched for scrap. The FM additionally mentioned that if a car fails the health check greater than thrice, it could possibly be despatched for obligatory scrapping.


What about the price of re-registration and taxes concerned?

In line with a current proposal floated by the Ministry of Street Transport and Highways, the ministry plans to extend the re-registration value by 25 occasions on automobiles older than 15 years. If permitted, the health check value of a industrial car will likely be about ₹ 25,000, versus simply ₹ 200 per 12 months. Equally, the renewal of registration value for automobiles will go as much as ₹ 15,000 from the present expenses of ₹ 600. The proposal additionally plans to extend the registration renewal charge for 2 and three-wheelers to round about ₹ 2,000-Three,000, from the present value of ₹ 300. As well as, the federal government can also be planning to levy Inexperienced Tax on the time of renewal. The renewed registrations will stay legitimate for a interval of 5 years.


Additionally Learn: Automobile Scrappage Coverage Accepted For 15-Yr-Outdated Authorities And PSU Automobiles From April 1, 2022

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The Inexperienced tax levied on automobiles will likely be as soon as in 5 years and must be paid on the time of the health check

What’s Inexperienced Tax and why ought to one pay it?

Inexperienced tax will not be a totally alien idea to these dwelling in Maharashtra and Delhi. Each areas already levy a inexperienced tax or Setting Compensation Cost (ECC) on automobiles older than 15 years. At present, petrol automotive house owners in Maharashtra pay about ₹ 3000 for the inexperienced tax, which fits as much as ₹ 3500 for diesel automobiles. The inexperienced tax on two-wheelers stands at ₹ 2000. For industrial car house owners, a inexperienced tax is levied after a interval of eight years. Underneath the brand new proposal, a inexperienced tax will likely be levied pan India and would require you to pay 10-25 per cent of your highway tax on the time of the registration renewal. In Delhi-NCR, the inexperienced tax could possibly be as excessive as 50 per cent of the highway tax.

How does having a car scrappage coverage assist?

The entire goal of getting the car scrappage coverage in place and the next taxes is to dissuade older automobiles from public roads. The federal government says that this can assist cut back air air pollution and dependency on oil imports. On the similar time, the federal government can also be pushing the adoption of electrical automobiles that additionally intend to satisfy the identical goal. In line with the Federation of Sellers Affiliation (FADA), there are about 37 lakh industrial automobiles and 52 lakh passenger automobiles eligible for voluntary scrappage with 1990 taken as the bottom 12 months. About 10 per cent CVs and 5 per cent PVs may nonetheless be plying on the highway, says FADA. This does open room for extra retail buy within the auto sector, giving it the much-needed enhance particularly within the medium and heavy automobiles phase.


Additionally Learn: A Scrap Automobile Designed For Leisure Actions

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The scrappage coverage proposal reportedly will embody incentives to prospects for voluntary scrapping automobiles in alternate for purchasing a brand new car

Will there be any incentives for voluntary scrapping automobiles?

Whereas there was no affirmation on the identical, the federal government was devising a compensation plan for these voluntarily scrapping their outdated automobiles as a part of the coverage. The proposal consists of offering incentives to prospects within the type of reductions or waving off highway tax or registration expenses.

Additionally Learn: M&M Turns into India’s First Approved Automobiles’ Recycler

What about car scrapping centres?

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The scrapping business is unorganised and there are not any official centres simply but. Mahindra & Mahindra partnered with MSTC, a Authorities of India firm, to open India’s first recycling centre in 2018. That mentioned, there is not any phrase extra such organisations and gamers out there. Nevertheless, we count on the coverage to have solutions to those considerations when it’s formally introduced.

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