If you replace your 10-year-old car with a new one, you may get a bonanza. The Ministry of Road Transport and Highways (MoRTH) has written to the Finance Ministry to give 40 per cent discount on taxes in such cases of replacement of vehicles. This could mean an upfront discount between Rs45,000 and Rs70,000 depending on the make of your car.
To persuade people to give up their aging vehicles to combat pollution, MoRTH Minister Nitin Gadkari has already offered to give an additional benefit of up to Rs30,000 on sale of small cars and up to Rs1,00,000 on sale of commercial vehicle. If Finance Ministry’s approves Gadkari’s proposal, then a person surrendering his 10-year-old car could benefit up to Rs1 to Rs1.5 lakh on the purchase of a new vehicle.
“We have sought tax exemption up to 40 per cent on each vehicle, which at present comes up to Rs1.5 lakh for small cars and sedans. We also propose to pay a separate remuneration from our Ministry on surrender of old vehicles. An individual seller will get a certificate which one could use to get a flat discount when buying a new vehicle,” Gadkari explained in a media interaction after the first national Sagarmala apex committee meeting on Monday.
Car taxes, which include Value Added Tax (VAT), Service Tax, Road Tax, and Insurance, etc, form a major part of the cost of a new car. The taxes range from 25 per cent to 47 per cent of the car cost depending on the size and make of the car.
“The Government also plans to build eight scrap recycle centres near ports like Kandla to recycle used vehicles from world over and boost automobile exports which is Rs 2.5 lakh crore at present,” he said. Gadkari said a Cabinet note will be floated soon in this regard.
“State Trading Corporation and Mckinsey have submitted a report to help us set up plants to recycle scrap and create new units,” said Gadkari.
“Currently we are accumulating over two lakh tonne scrap, which can be recycled and reused. later we may also source scrap from other countries to recycle and resell,” he said.
Gadkari said the move follows National Green Tribunal (NGT) order banning plying of diesel vehicles which are over 10-year-old in Delhi-NCR and the new policy will offer financial incentives up to Rs 1.5 lakh on surrender of such vehicles.
He said there is an urgent need to recycle as more than 10-year-old vehicles were running on roads with old technology which lacks not only safety norms but creates pollution. “Recycling would not only create employment but boost the economic growth,” he said.