Scrappage policy the benefit & incentive

The  government has been pushing for a vehicle scrappage policy in order to replace older and more polluting vehicles on the roads. 

The policy has been a long time coming and was finally announced in March 2021.

The new policy includes a set of rules and guidelines for vehicle owners who wish to participate in the scrappage program.

In this article, we will explore the key aspects of the vehicle scrappage policy in India and how to opt in.

What are the rules of the Vehicle Scrappage Policy in India:

1. Age of the vehicle: Under the new policy, vehicles that are older than 15 years for commercial vehicles and 20 years for private vehicles will be eligible for scrappage. This is in line with the government’s aim to phase out old and polluting vehicles.

2. Fitness certification: All vehicles that are over 15 years old will need to undergo a fitness test in order to be eligible for the scrappage program. The fitness test will check for safety features, emission levels, and other factors to determine the road worthiness of the vehicle.

3. Scrappage centers: The government will set up authorized scrappage centers where vehicle owners can bring their old vehicles for scrapping. The scrappage centers will be required to follow environmental norms and safety standards.

4. Incentives: To encourage vehicle owners to opt for the scrappage program, the government is offering incentives in the form of discounts on new vehicle purchases and waiver of registration fees. These incentives will be higher for those who choose to scrap their vehicles voluntarily.

5. Recycling: The scrappage centers will be required to follow proper recycling and disposal norms for the scrapped vehicles. The aim is to promote sustainable and eco-friendly practices in the auto industry.

Government Incentives for car owners who decide to scrap their old vehicles

1. Discount on new vehicle purchase: After scrapping the old vehicle, the owner may receive a discount of 4 to 6% on the cost of a new vehicle (excluding taxes and other charges).

2. Waiver of registration fees: Upon submitting the Certificate of Deposit, the owner may also be exempt from paying registration fees for the new vehicle.

3. Concession on road tax: Some state governments may offer a concession on road tax for new vehicles purchased after scrapping the old one. The concession can be up to 25% for non-transport vehicles and 15% for transport vehicles.

4. Manufacturer discounts: In addition to the government incentives, vehicle manufacturers have been requested to offer a discount of 5% on the purchase of a new vehicle against the Certificate of Deposit. This discount is offered on top of the scrap value received for the old vehicle.

Overall, these incentives are designed to encourage vehicle owners to participate in the scrappage program and replace their old, polluting vehicles with newer, more efficient ones. By doing so, they can benefit from lower costs, improved safety, and a cleaner environment.

Disadvantage of owning an old vehicle  After 1st April 2023.

1. Higher fees: For commercial vehicles that are more than 15 years old, the charges for the fitness test and the grant of Fitness Certificate (FC) are higher. This can lead to increased expenses for vehicle owners.

2. Higher re-registration fees: For private vehicles that are more than 15 years old, the charges for the renewal of the RC are higher. This can also add to the financial burden for vehicle owners.

3. Green Cess: An additional green cess of 10 to 15% over and above the road tax shall be applicable for such older vehicles. This cess is imposed to discourage the use of older vehicles that are more polluting and harmful to the environment.

As per the official notification, the following are the new registration renewal charges for a 15-year-old personal vehicle.

Below is a table highlighting the fitness certificate renewal fee for 15-year-old commercial vehicles.

Overall, these disincentives are meant to discourage vehicle owners from continuing to use older, polluting vehicles that can harm the environment and lead to increased maintenance costs. By opting for the scrappage program, vehicle owners can benefit from incentives and avoid these disincentives.