What is Green Tax?

In a recent development, the Government of India has released a proposal of a green tax that will be levied on the renewal of the registration of personal vehicles more than 15 years of age. Moreover, as per this proposal, this tax will be lower for commercial vehicles but higher for any vehicle that will be used in a city with high pollution. Basically, this tax can also be called pollution tax or environmental tax as it is levied on all commodities that lead to pollution. This tax will not only discourage people from using old cars but will even help the authorities work towards reducing pollution by investing the money in planting more trees.

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What is Green Tax?

Green Tax, which is also called pollution tax and environmental tax, is basically an excise duty that is collected by the authorities on commodities that lead to an increase in pollutions. By charging this tax, the authorities aim to discourage people from using such goods, thereby leading to a drop in pollution. Also, the revenue generated through this tax will help authorities undertake activities to reduce pollution. The entire world is already struggling to curb the menace of pollution as it has not only lead to climate changes but has even played a very detrimental role in the well-being of living organisms.

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Unfortunately, the effects of pollution are the same on every living organism regardless of whether or not it has played a role in causing the pollution. So, basically, the green tax is an exercise aimed at discouraging people from undertaking activities that cause pollution. Of course, usage of old cars plays a major part in increasing the air pollution and hence, charging of green tax from people who use old cars is a direct step to deter them from using cars that pollute more than their newer counterparts.

Such taxes have proved to go a long way in acting as a deterrent by pushing the owners of old vehicles to scrap their old cars and buy a new one that will naturally cause a lot less pollution. Meanwhile, even if those who still choose to continue with their old cars will have to now pay an extra tax that can be used by the authorities in other activities that reduce the pollution.

Green Tax on Vehicles

It’s only now that the concept of green tax has been introduced in our country. However, CCTV cameras and RFID tags have been installed at all entry points of Delhi to make sure that commercial vehicles that enter the capital meet the emission norms. Also, those found in violation of the rules will have to pay fines in the form of ECC (Environmental Compensation Charge) that will be imposed based on the size and type of the vehicle. Originally, these fines used to range between Rs.700 to Rs.1300, depending on the size of the truck. However, in order to get stricter, these charges have been increased to double.

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Green Tax for Cars and Two Wheelers

After levying a green tax on commercial vehicles, finally, the government has even started imposing a green tax on private vehicles that are older than 15 years. The same tax is levied on commercial vehicles that are more than 8 years old. Given below is the tax structure on the private cars and two-wheelers. The below tax will have to be paid every 5 years.

Two-wheelers	Rs.2000
Diesel vehicles	Rs.3500
Petrol vehicles	Rs.3000

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Meanwhile, the green tax levied on commercial vehicles more than 8 years old has been given as follows-

Autorickshaws	Rs.750
Light good vehicles	Rs.2500
Six-seater taxis	Rs.1250
vehicles with more than 7500 kg capacity	10% of annual tax
Service vehicles	2.5% of annual tax
Contract buses	2.5% of annual tax
Tourist buses	2.5% of annual tax

Green Tax or Pollution Tax or Environmental Tax that is levied through Environment Compensation Charge first came into effect back in October 2015 and was introduced only in Delhi. With time, several revisions have been made to this tax based on the various inputs provided by the Supreme Court. It’s because of the ECC that there was even a temporary ban on diesel vehicles with an engine size of more than 2000cc, and now the Delhi government is even contemplating using Section 194 of the Motor Vehicles Act (MVA) that will put a ban on the entry of commercial vehicles at pre-defined times. Under the same section of MVA, the government can even put a fine of at least Rs 2,000 on those who are caught in violation of the rule.

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