The government is considering a proposal to provide more tax-related concessions on vehicles that are purchased after scrapping old vehicles under the recently launched National Automobile Scrappage Policy, Union Minister Nitin Gadkari said on Tuesday.
While inaugurating Maruti Suzuki Toyotsu India’s first government-approved scrapping and recycling facility for end-of-life vehicles (ELVs), Gadkari also said the scrappage policy is going to reduce pollution.
“The GST revenue of both the Centre and states will rise due to the scrappage policy… I will discuss with the finance ministry on how to provide more (tax-related) concessions under the new vehicle scrappage policy,” he said.
Under the new policy, the Centre had said the states and Union Territories (UTs) will provide up to 25 per cent tax rebate on road tax for vehicles that are purchased after scrapping old vehicles.
The road transport and highways minister said he is also requesting the GST Council to explore what more incentives can be provided under the National Automobile Scrappage Policy.
“The final decision (on providing more incentives under the National Automobile Scrappage Policy) will be taken by the finance ministry and the GST Council,” he said.
The minister added that the scrappage policy will benefit all stakeholders as it will boost manufacturing, create jobs and help both the Centre as well as state governments in earning up to Rs 40,000 crore each in GST.
He said the scrappage policy will be one of the key factors to control pollution and create jobs.
“Old cars are much more polluting than new ones. So, they need to be phased out. We expect sales to grow 10-12 per cent due to scrappage policy,” the minister said.
Prime Minister Narendra Modi had launched the national vehicle scrappage policy in August and had said it will help phase out unfit and polluting vehicles and also promote a circular economy.
The policy will give a new identity to India’s mobility and auto sector, Modi had said.
Under this policy, people who give their old vehicle for turning it into scrap will be given a certificate by the government. People having this certificate will not be charged any registration fee on the purchase of a new vehicle.