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Recently, the Prime Minister Narendra Modi launched the Vehicle Scrappage Policy .

  • It was first announced in the Union Budget for 2021-22.
  • The policy is estimated to cover 51 lakh Light Motor Vehicles (LMVs) that are above 20 years of age and another 34 lakh LMVs above 15 years of age.
  • India will also implement a Global Positioning System (GPS)-based toll collection system and do away with all toll booths within a year.

Process: –

  • A Vehicle older than 20 years, if found unfit or registration certificate is not renewed, will be De-registered
  • Registered owners to handover such vehicles to a Registered Vehicle Scrapping Facility with Certificate of the vehicles, registration certificate, their PAN details and other documents.
  • Scrapper to verify records of the vehicles from database of the Stolen vehicles and issue a Certificate of Deposit, mandatory for the owner to avail incentives
  • The Certificate once used will be stamped “Cancelled” by the agency
  • Government will make a Database of the vehicles scrapped every year.

 

Tow Truck Evacuating Blue Car, Road Assistance and Evacuation Service Flat Vector Illustration

Financial incentives: –

  • Scrap value: 4-6% of ex-showroom price of a new vehicle to be given to the owner by the scrapping centre.
  • Vehicle Manufacturers are advised to provide 5% discount on the purchase of a new vehicle against the scrapping certificate.
  • State governments advised to offer a road tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles.
  • Registration fees to be waived off for the purchase of a new vehicle against the scrapping certificate.

Scrapping centres: –

  • Encourage public and private participation in opening Registered Vehicle Scrapping Facility (RVSF).
  • Encourage setting up of Automated Fitness Centres on a PPP model by state government, private sector, automobile companies, etc.

Registration and fitness tests: –

  • Criteria to determine vehicle fitness will primarily be emission tests, braking, safety equipment, among many other tests which are as per the Central Motor Vehicle Rules, 1989.
  • Rules for fitness tests and scrapping centres to be applicable from October 1, 2021, while scrapping of government and PSU vehicles which are older than 15 years to come into effect from April 1, 2022.
  • The mandatory fitness testing for heavy commercial vehicles to be in force from April 1, 2023, and the same will be in place in a phased manner for other categories from June 1, 2024.
  • Increased fees for fitness certificate and test to be applicable for commercial vehicles 15 years onwards from the date of initial registration and in case of failure to get the fitness certificate, such vehicles to be de-registered.
  • Increased re-registration fees to be applicable for private vehicles 15 year onwards from the date of initial registration. Such vehicles to be de-registered after 20 years if found unfit or in case of a failure to renew the registration certificate.
  • A vehicle failing the fitness test or failing to get a renewal of its registration certificate to be declared as ‘End of Life Vehicle’.

Significance:

  • Creation of Scrap yards: It will lead to creation for more scrap yards in the country and effective recovery of waste from old vehicles.
  • Employment: In the new fitness centers, 35 thousand people will get employment and an investment of Rs 10,000 crores will be pumped in.
  • Improved Revenue: This will boost sales of heavy and medium commercial vehicles. The government treasury is expected to get around Rs 30,000 to 40,000 crores of money through Goods and Services Tax (GST) from this policy.
  • Reduction in Prices: Prices of auto components would fall substantially with the recycling of metal and plastic parts. As scrapped materials will get cheaper, the production cost of the vehicle manufacturers will also reduce.
  • Reduce Pollution: It will help improve fuel efficiency and reduce pollution. As older vehicles pollute the environment 10 to 12 times more, and estimated that 17 lakh medium and heavy commercial vehicles are more than 15 years old.

Author Bio

Qualification: CA in Practice
Company: JAIN PC and ASSOCIATES
Location: Ahmedabad, Gujarat, India
Member Since: 24 Jun 2021 | Total Posts: 16
Hi there!! Myself CA Mohit Loonkar a practising Chartered Accountant from Ahmedabad. I can be reached at [email protected] LinkedIn: https://www.linkedin.com/in/camohitloonkar/ View Full Profile

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