Giving Up Old Cars For New May Soon Earn You Tax Sops

It’s a known fact that as vehicles gets old, they become less efficient and guzzle more fuel – both of which are neither good on the owner’s pocket or the air quality. The government it appears is now serious about getting people to junk their old cars for new, more fuel-efficient ones. Towards this endeavour, the Road Transport and Highways Ministry has designed a Voluntary Vehicular Fleet Modernisation Policy (V-VMP) which proposes to give excise duty relief to people willing to scrap their old cars for new models. The matter will undergo further discussion once Minister for Road Transport and Highways Nitin Gadkari meets Finance Minister Arun Jaitley on August 24, 2016.

The ministry proposes a three-stage incentive scheme under V-VMP, which will be applicable to people who scrap their cars which were either bought before April 2005 or did not comply with the Bharat Stage IV emission standards. In return for disposing of their old cars, the ministry proposes that people get a fair value for the scrap, discounts from automobile manufacturers, and pay only half the excise duty on the new car purchased. Put together, these incentives are likely to reduce the cost of a new vehicle for the buyer by 15 per cent, on an average. According to government estimates, the scheme may help substitute 28 million vehicles with less-polluting ones. As per the Road Transport and Highways Ministry, the policy has the potential to lessen vehicular emission by 25 to 30 per cent and save oil consumption by 3.2 billion litres a year. "The reduction in oil consumption by new vehicles will help save nearly Rs 7,000 crore in oil import," read the concept note on the policy floated by the transport ministry.

Those opting for V-VMP will have to provide relevant documents related to the vehicle at the recycling centre. Once the verification is done, the vehicle owner will get a certificate and the price for the scrap. To avail rest of the incentives under the scheme, the customer will have to provide the certificate to the dealer while buying the vehicle.

Worsening air quality has been on the rise, especially in congested cities like Delhi. With automobile manufacturers hiking prices for their offerings, buying a new car has become, more or less, a luxury. The V-VMP scheme, however, can work in favour of the environment as well as the customer provided it is approved by the relevant bodies.