Centre to ask states for up to 25% road tax rebate under national automobile scrappage policy

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State governments will be asked to offer a road tax rebate of up to 25 per cent for personal vehicles that are purchased after scrapping old vehicles under the national automobile scrappage policy, the Union government said on Tuesday.

The rebate could be up to 15 per cent for commercial vehicles that are bought after scrapping the old vehicles.

"As far as road tax (rebate) is concerned, it is not an advisory, we are going to make changes in the rules (to provide road tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles on buying new cars on scrapping old vehicles)," Amit Varadan, Joint Secretary in the Ministry of Road Transport and Highways, said at a press conference.

He also emphasised that the central government has power to decide principles of taxation in the concurrent list.

"We are authorised under the concurrent list to decide principles of taxation. So, we are making changes in the rules, and final rules will be out soon," he said.

In March, Road Transport and Highways Minister Nitin Gadkari told Parliament that state governments may be advised to offer a road tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles.

Admitting that some states have expressed concerns over the proposed rebates, Varadan said the ministry successfully convinced those states to offer a road tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles on buying new vehicles after scrapping old ones.

At the press conference, Gadkari said the issues related to the road tax rebate is a subject under the central government.

"The revenue of the states will increase after they will implement the National Automobile Scrappage Policy," he said.

While making it clear that road tax rebate issue is not a political one, Gadkari said it is a public interest issue and expressed hope that all states will cooperate with the Centre.