Vehicle scrapping policy — Gadkari on road tax rebate: In concurrent list, Centre can decide

THE NOTIFICATION to mandate a range of rebate in road tax levied by states on new cars bought after scrapping old cars will be issued in a few days.

The Centre has held discussions with states after taking the legal opinion that in this matter the central government can, in fact, dictate the range of the tax, as per the principle of taxation on matters in the concurrent list.

Some states, especially ruled by the Opposition, had raised the query on the draft notification issued earlier, saying the Centre under the federal structure cannot direct how much tax a state should charge.

“It is in the concurrent list, so Centre can decide as per the principle of taxation,” Road Transport and Highways Minister Nitin Gadkari told reporters on Tuesday while talking about the Voluntary Vehicle Fleet Modernisation Programme, also known as the vehicle scrappage policy.

As per the proposed notification, a vehicle owner, after furnishing his certificate of scrappage, will be entitled to a discount in the road tax ranging up to 25 per cent if it is a personal vehicle and up to 15 per cent in case of commercial vehicle.

During the investor summit in Gujarat last week, in which Prime Minister Narendra Modi formally launched the policy, seven MoUs were signed—six in Gujarat and one in Assam. Tata, Mahindra and MSTC are among those who have signed the MoUs, along with local players to set up scrapping centres.

The final rules for the scrapping centres will be issued soon, ministry officials said.

“It is a win-win policy wherein states as well as Centre will get around Rs 40,000 crore in GST following sale of new cars,” Gadkari said. He said the automobile sector provides direct and indirect employment to 75 lakh people.

The minister said that in the near future, electric vehicles will be cheaper than petrol and diesel ones. “I am going to launch electric tractors next month,” he said.

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