Vehicle Scrappage Policy: Five details every vehicle owner should know

Union minister Nitin Gadkari has recently revealed more details about the upcoming Vehicle Scrappage Policy that intends to do away with old cars to reduce polluting vehicles on road. The policy, which was proposed by Finance Minister Nirmala Sitharaman during her Budget presentation last month, has been a long-standing demand from the carmakers and may help boosting sales of new cars as well. Before the policy is announced in its entirety, here are five things that a vehicle owner should know and how it may affect them.

1

Vehicle owners who opt for the upcoming scrappage scheme to get rid of their old vehicles will be eligible for benefits as part of the policy when they purchase a new vehicle. Union minister Nitin Gadkari has recently said that consumers who junk their old vehicle and buy a new one under the Vehicle Scrapping Policy will get around 5 per cent rebate from auto companies on the new purchase.

2

While the minister announced a 5 per cent rebate for old vehicles, it is not clear yet what factors will determine the rate of rebate for older vehicles. One of the key determining factors is likely to be the age and condition of the old vehicles going for sale. In general, the government will not encourage vehicles on road after it has hit a certain age. The nuances of this part of the scheme is expected to be cleared in coming days.

3

According to the vehicle scrappage scheme, owners of passenger cars that are older than 20 years will have to go for a compulsory fitness test. The testing facility, which will be set up on a PPP basis, will hold automated tests and certify whether a vehicle is fit or not to ply on roads. Similar fitness tests will be carried out for commercial vehicles as well which are more than 15 years old.

4

If any vehicle fail to pass this automated test, will need to be taken off the roads or face huge amount of penalty. So, in case your vehicle is past the age mentioned in the policy and has also failed the automated test, chanced are that it will be impounded if seen on the road. What is yet to be officially announced is the amount of fine one needs to pay to keep the car running.

5

In case your private vehicle is older than 8 years but has passed the automated test, it will still be subjected to pay a green tax when the policy kicks in. The amount of the tax is likely to be somewhere in the range of 10-25 per cent of the road tax which will be additionally charged when you go for renewal of the vehicle’s fitness certificate.