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Green Tax in India – Green Tax for Cars and Two Wheeler

The Centre plans to notify a system of imposing “green tax” on older vehicles in a move to disincentive the use of polluting vehicles, and to curb pollution in the country.

  • Use of revenue through tax: According to the ministry, the revenue collected from the green tax will be kept in a separate account and will be used for tackling pollution.

  • Public transport vehicles, such as city buses, will be charged lower green tax; higher green tax (50 per cent of road tax) will be levied on vehicles being registered in highly polluted cities, the government statement said.
  • Differential tax will also be charged depending on fuel (petrol/ diesel) and the type of vehicle.
  • Benefits of the green tax: It will dissuade people from using vehicles which damage the environment and motivate them to switch to newer, less polluting vehicles. Green tax will reduce the pollution level, and make the polluter pay for pollution.
  • No-Benefits: Imposing additional tax on Public transport such as buses will transfer the burden on the public which is already suffering income losses post pandemic crisis. Green tax will contribute in increasing the overall transportation cost which could surge the overall inflation.

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