Vehicle Scrapping Policy: Get A 5 Per Cent Discount On New Car By Scrapping An Old One

Everybody loves discounts, especially when they are available in cars. If we say that you can purchase a new car while enjoying a 5% deduction on the actual, you would immediately head to the store, but here is a small catch.

In April 2022, the Government of India introduced Vehicle Scrapping Policy. This government-funded programme was designed to remove old commercial and passenger vehicles from the roads. The initiative’s aim was to reduce pollution, bring a boost to the automotive sector, and improve safety on roads. 

According to a report published in IQAir stated that there were 1.6 million deaths in 2019 in India that were linked to the poor quality of air. The causes were diabetes, strokes, myocardial infarctions, and lung cancer. 

One of the sources of pollution mentioned in the study was the running of some taxis and auto-rickshaws on fuel that was adulterated with cheaper ingredients and sold at cheap prices. “The taxation system in India exacerbates this situation because gasoline carries a much higher rate of tax than diesel,” mentioned the report. 

The reason for pollution in the urban areas was found to be contributed by vehicles and industry. A 2019 worldwide survey had 21 Indian cities in the list of 30 most polluted cities in the world.

To learn about the policy and its benefits in detail, we connected with Udayan Adhye, a finance content creator on Instagram. 

What Is Vehicle Scrapping Policy?

Under the Vehicle Scrapping Policy, if a person owns a 15-year-old commercial and a 20-year-old private vehicle, they have to run it through a ‘fitness and emissions test’ to keep their registration.

If the vehicle fails the test, it will join the list of end-of-life vehicles. The owner will lose the registration certificate, and the vehicle would be recommended to be scrapped. It can help to cut down emissions by 15-20%, thus, reducing pollution.

If you go through the scrapping of the vehicle, you are rewarded with incentives. This includes a scrappage certificate, and if you show this certificate while purchasing a new car (How To Clean A Car), you get a discount on it. 

Who Can Avail Benefits From Vehicle Scrapping Policy?

• The policy will benefit Scrap dealers. The scrapping industry comes under the informal sector in India, but the initiative will formalise it. Scrap dealers can earn profit by selling parts recovered from the old vehicle.
• Automakers have benefited from the increased demand for new cars among customers.
• Vehicle owners get discounts on the new vehicle, which can help them immensely with their budget.
• The environment is drawing maximum benefits from it. Less polluting vehicles means our families can breathe clean and fresh air.

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What Are The Benefits Of Vehicle Scrapping Policy?

The benefits of the vehicle scrapping policy include,

• State governments offer a concession on motor vehicle tax (Tax Deduction For FY 2022-23) of up to 15% on transport vehicles and 25% on non-transport vehicles.
• For scrapping the old vehicle, the owner gets 4-6% of the ex-showroom price of the new vehicle.
• Auto manufacturers offer a discount of 5% on the new vehicle if you submit the scrappage certificate.
• The Ministry of Road Transport and Highways mentioned that the policy would boost the availability of raw materials to steel, electronics, and automotive industries. 
• A new vehicle would help you seal better deals on the insurance. New cars get quality covers compared to old vehicles. 
• A new car has a lower maintenance cost compared to an old one. 
• The biggest advantage is you would reduce your carbon footprint by driving a fuel-efficient car that would help to keep the environment green and clean. 

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