NEW DELHI:The finance ministry has earmarked Rs 2,000 crore as special assistance for states, in a move to persuade state governments to scrap vehicles that are older than 15 years and offer road tax concessions to private persons while buying a new vehicle in lieu for retiring their old vehicles.
This assistance or incentive will be on a “first come first served” basis and the states will have to achieve certain milestones.
In a letter addressed to all chief secretaries last week, the department of expenditure (DoE) has informed them that the “Incentives for Scrapping of Old Vehicles” has been included in the special assistance to states for capital investment for 2022-23. It said this aims at providing incentives to the states for “scrapping of state governments’ vehicles which are old vehicles and providing tax concessions to individuals for scrapping old vehicles”.
The states will also have to grant a one-time waiver of pending liability on old vehicles which are scrapped at registered vehicle scrapping facilities for at least one year.
Recently, the finance ministry had issued a circular asking all central government departments and PSUs to mandatorily scrap their 15-year-plus vehicles. This direction had come barely days after the road transport ministry made scrapping of such government vehicles mandatory, both at Centre and states; including buses run by transport corporations, vehicles owned by local bodies and panchayats from April 2023.
Sources said there were doubts whether states would go for this considering the financial implications. They added the finance ministry’s new incentive scheme will now convince more states to opt for this. The incentive will be applicable till March 2023.
As per the DoE circular, the grant will be provided in two tranches — first 50% after the states meet conditions and become eligible to avail the incentive and the remaining half after the road transport certifies that the states have completed the requirement within the prescribed timeline. The states will also be free to propose any capital investment project from the incentive amount.
