The government has said that vehicle scraping certificate will be issued to vehicle owners to scrap vehicles older than 15 years.
New scrap policy
The central government has issued a draft notification on March 30, proposing a concession of up to 25 percent on the motor vehicle tax for all vehicles purchased with a vehicle scraping certificate.
According to the draft notification issued by the Ministry of Road Transport and Highways, private vehicles purchased with a vehicle scraping certificate will be given a 25 percent rebate on motor vehicle tax, while a 15 percent discount on commercial vehicles will be given. According to the government, this tax exemption for commercial vehicles will be for a period of eight years, while for private vehicles the concession will be for a period of 15 years from the date of registration.
The government has sought suggestions from various stakeholders on the subject for a period of 30 days. The new rules are expected to come into effect from 1 October. The government has said that vehicle owners will be issued a certificate for scraping vehicles older than 15 years.
Older vehicles will have to give fitness test
This cash-for-clutch scheme was mentioned in the budget of 1 February, but the details were not given at that time. The emphasis on the removal of old cars from the roads under the Vehicle Scrappage Policy means that autos that are more than 20 years old and commercial vehicles older than 15 years will have to undergo fitness test. If the fitness certification is not kept current, then those vehicles will be disabled.
It will also cost more to obtain a fitness certificate for cars older than 15 years, as well as vehicles used by various government agencies will be automatically de-registered after 15 years. These automated fitness tests are being prepared on the basis of the Public-Private Partnership (PPP) model. Under this, the central government will work closely with states and private players.
The vehicle scrap policy will improve the environment as well as the auto sector will also benefit tremendously. The car manufacturers are expressing confidence that the fall in the industry during the epidemic will soon be relieved.
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