5% Rebate On Buying A New Car Under Vehicle Scrappage Policy; What Does It Mean?

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Shri Nitin Gadkari, Minister of Road Transport and Highways, Government of India has given some more details of the vehicle scrappage policy which was announced by the Union Finance Minister, Smt Nirmala Sitharaman while presenting the budget on the 1st of February 2021. She had mentioned that the policy will be officially unveiled in a fortnight or so, post the budget session, but we are still waiting for that. Although, Shri Nitin Gadkari did declare that buyers of new vehicles under the scrappage policy will be eligible for a 5% rebate.

Official statements –

In a recent conversation with PTI, Shri Gadkari said, “There are four major components of the policy. Apart from rebates, there are provisions of green taxes and other levies on old polluting vehicles. These will be required to undergo mandatory fitness and pollution tests in automated facilities. For this, automated fitness centres would be required throughout the country and we are working in that direction.”


“The structure and framework of scrapping policy is under work and green tax has already been notified. Many states have notified in an ineffective way ….We want to advise the state governments through a notification under Motor Vehicles Act to consider imposing green tax on older vehicles which cause more pollution,” Road Transport and Highways Secretary Shri Giridhar Aramane had said last month.

More details

Under this policy, private vehicles more than 20 years old and commercial vehicles more than 15 years old will have to undergo a fitness test at authorised fitness centres for pollution level check. Should your vehicle fail the test and found on the road, it will attract heavy penalties and shall be impounded. If your vehicles passes the fitness test, you can drive your priceless possession on the road by paying a green tax.

Scrapyard cars

According to the govt, this move will help control air pollution levels in the country and also spur the demand for newer vehicles further propelling the auto industry. This is also aimed at smoothening out and emphasize the transition to electric vehicles which like it or not, are the future inevitably. There are more and more players entering the electric bandwagon each passing and we hope if Karl Benz looks down upon us, he should be proud of what the ICE vehicles have done for humanity and us, enthusiasts.

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