Proposal To Levy Green Tax On Old Polluting Vehicles Gets Govt Nod; To Be Notified After Consultation With StatesUnion Minister Nitin Gadkari (Photo by Sushil Kumar/Hindustan Times via Getty Images)

In a major development, Union Minister for Road Transport and Highways Nitin Gadkari on Monday (25 January) said that the ministry has approved a proposal to levy a "green tax" on old vehicles which are polluting the environment, reports Business Standard.

Approved by the Ministry of Road Transport and Highways (MoRTH), the proposal will now go to the States for consultation before it is formally notified.

The green tax would be imposed on transport vehicles older than eight years at the time of renewal of the fitness certificate - at the rate of 10-25 per cent of the road tax. However, personal vehicles will be taxed at the time of renewal of registration certification after 15 years.

The taxes collected as a result will be placed in a separate account which would be dedicatedly used for tackling pollution, and for the states to set up facilities for emission monitoring.

With the new tax, the government is aiming to discourage the use of vehicles which harm the environment and to push the adoption of newer less polluting vehicles.

It should be noted that the proposal exempts hybrids, electric vehicles, and alternative fuel vehicles which run on fuels like compressed natural gas, ethanol, and liquefied petroleum gas. Also, farm vehicles, such as tractors, harvesters, and tillers, will be exempted.

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