Those Who Scrap Old Vehicles Could See A Further Reduction In GST When Purchasing A New Car: Nitin Gadkari

Currently, car owners who scrap their old cars don’t have to pay any registration charges for their new car, and also get up to a 25 percent discount on road tax

Union Minister Nitin Gadkari recently revealed the government is considering further tax concessions on new vehicles bought after scrapping old ones. The revelation was made at the inauguration of Maruti and Toyota’s scrapping facility in Noida, Uttar Pradesh.

The National Automobile Scrappage Policy, which was formally launched in August 2021 by Prime Minister Narendra Modi, allows new car buyers to avail up to 25 percent reduction in road tax, and zero registrations charges. According to Gadkari, discussions are on with the GST council to reduce the overall tax for new car buyers who scrap their old cars. The final decision on this matter will be taken by the GST Council and the Finance Ministry.

The government eyes the scrappage policy to be key in the reduction of air pollution. It will also result in a 10-12 percent increase in new car sales, which will boost GST collection by Rs 40,000 crore each, for the state and the central governments. The reduction in GST is expected to come from this additional collection of taxes.

It is yet not clear exactly when the GST Council and Finance Ministry will give their verdict on this matter, but it should be soon, as the government has been proactively pushing towards less-polluting and safer vehicles on Indian roads, and the scrappage policy is a key step in realising this goal.

Do you have an old car at home that you would like to scrap before buying a new car? We have covered this topic in detail over here, so you can know the exact steps required to scrap your old car. Alternatively, it also lists how vehicles close to their registration expiry date can be tested, and how their registration will be extended if they are deemed fit to run on Indian roads.