The Government of India has proposed doubling the rebate up to 50 percent in one-time tax on the purchase of new vehicles in lieu of scrapping the ones with BS-II or earlier emission norms. The development was confirmed via an official draft notification issued on January 24, 2025.
- The cap on the rebate currently stands at 25 percent for private vehicles
- For commercial vehicles, it stands at 15 percent
- Vehicles qualifying for additional rebates will be at least 25 years old
The official draft notification released by the Ministry of Road Transport and Highways (MoRTH) states that a discount of up to 50 percent will apply to vehicles, both commercial and personal, that are BS-I-compliant or were manufactured before the BS norms were introduced. The notification further says that this discount will also apply to BS-II vehicles that fall under medium and heavy private and transport categories.
Currently, owners who send their old privately registered vehicles for scrapping receive a 25 percent discount in the motor vehicle tax for the new vehicle purchased. For commercial vehicles, the rebate is capped at 15 percent.
The Government of India introduced the BS-I carbon emission norms in 2000, followed by the BS-II emission norms in 2002. This means vehicles qualifying for the additional rebate are at least 25 years old.
Owners of these old vehicles who wish to get them scrapped under the Transport Ministry’s Voluntary Vehicle Modernization Program or Vehicle Scrapping Policy can do so through a network of Registered Vehicle Scrapping Facilities (RVSFs) and Automated Testing Stations (ATSs).
Currently, there are over 60 registered vehicle scrapping facilities across 17 states/UTs and 75 Automated Vehicle Testing Stations across 12 states/Union Territories in India. The government plans to introduce more such facilities across the country in due course.
Hormazd Sorabjee
Anurag Chaturvedi
