India proposes green tax on old vehicles

India's Road Transport and Highways Minister Nitin Gadkari has approved a proposal to levy a "green tax" on old vehicles polluting the environment, an official statement said today.

The proposal will now go to different states for consultations before it is formally notified.

The minister also approved the policy of deregistration and scrapping of vehicles owned by government departments and PSU that are more than 15 years old. It is to be notified, and will come into effect from April next year.

Revenue collected from the green tax would be used to tackle pollution, according to the statement.

It is estimated that commercial vehicles, which constitute about five percent of India's total vehicle fleet, contribute about 65-70 percent of total vehicular pollution.

Older vehicles, typically manufactured before the year 2000 constitute less than one percent of the total fleet but contributes around 15 percent of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles, said the statement.

The main principles to be followed while levying the green tax are that transport vehicles older than eight years could be charged green tax at the time of renewal of fitness certificate at the rate of 10 to 25 percent of road tax, personal vehicles to be charged green tax at the time of renewal of registration certification after 15 years and that public transport vehicles like city buses are to be charged lower green tax.

Higher green tax (50 percent of road tax) is proposed for vehicles being registered in highly polluted cities.

Among other proposals for imposition of green tax is differential tax, depending on fuel (petrol/diesel) and type of vehicle.

It is also proposed that vehicles like strong hybrids, electric vehicles and vehicles powered by alternative fuels like CNG, ethanol and LPG would be exempted from green tax as are vehicles used in farming, such as tractor, harvester and tiller.