What is Green Tax?

 

What is Green Tax?

For controlling pollution due to old polluting vehicles, the government has a “Green Tax”. Revenue collected from the Green Tax will be kept in a separate account and used for tackling pollution. This proposal will go to states for consultation before actual implementation.

 When will Green tax be charged?

• For Commercial vehicles, green tax will be charged at the time of fitness renewal
• For Personal vehicles, green tax will be charged at the time of renewal of registration 

How much will be the Green Tax?

• It is expected to be charged at the rate of 10% to 25% of road tax
• It can go as high as 50% of road tax in highly polluted cities
• Exemptions will be given vehicles like strong hybrids, electric vehicles and alternate fuels like CNG

 What will be the Implications of Green Tax?

For Personal vehicles, new car sales will not be hampered but the renewal of registration will go down in highly polluted cities. This will result is the lower resale value of your vehicle towards the end of registration tenure. This can also be referred to as an alternate way to promote scrappage of vehicles.

For Commercial vehicles, there will be an increase in running cost of vehicles and hence rentals for cabs are expected to go high. With sluggish demand in the fleet segment today it will further mark questions on new taxi buyers for demand, profitability and sustainability with high rentals.