5 Steps to Scrap Old Car & Get Incentive to Buy a New Car
5 Steps to Scrap Old Car & Get Scrappage Incentive & Discounts to Buy a New Car - India's New Vehicle Scrappage Policy Detailed Explaination
The Union budget 2021 came with the inclusion of the vehicle scrappage policy we all have been waiting for. Although the details are sparse and the policy is yet to come into force, we have some details which are beneficial for the end consumer. Mr Nitin Gadkari, the Union Minister of Road Transport and Highways, confirmed the implementation of the Vehicle Scrappage Policy along with its consumer benefits. The new Vehicle Scrappage Policy will decrease the amount of pollution unfit vehicles emit on the roads. The policy is said to come into effect from April 2022 with multiple benefits provided to both consumers and auto manufacturers.
Talking about the benefits to the consumer, this policy will benefit through rebates which will be given after the scrappage of the old car. The consumer will get an expected rebate of 5% when buying a new car. Although it is yet to be confirmed, the 5% incentive will be given by the manufacturer of the car being purchased by the buyer. It is worth noting that every passenger car has to be scrapped after 20 years of use whereas the commercial vehicles will be mandated to be scrapped after 15 years of use.
Commenting on the announcement of the policy, Mr Nitin Gadkari said, "Automobile manufacturers will provide upto 5 per cent rebate on new car purchases to the consumers in lieu of scrapping the old car in addition to government incentives. Apart from the rebate, there are provisions of green taxes and other levies on old polluting vehicles. These will be required to undergo mandatory fitness and pollution tests in automated facilities. For this automated fitness centres would be required throughout the country and we are working in that direction."
The new car scrappage rebates, incentive and discount expected in the vehicle scrappage policy are
Scrap Value for your Old Car - 5% of ex-showroom price of the new car will be given to the car owner by the scrapping centre for scrapping old car
Tax Rebate - The state government may offer a tax rebate of upto 25% for private cars and 15% for commercial vehicles
Registration Charges Discount - New Car vehicle registration charges may be waived off or a discount may be given against the scrap certificate of deposit
New Car Discount - Car manufacturers may roll out special schemes like special finance offers or additional cash discount on new car against the scrap certificate of deposit
As we told you earlier, the actual details of the Vehicle Scrappage Policy are scarce. It is expected that all the passenger and commercial vehicles will have to pass a fitness test after 15 years and 10 years of use respectively. If the vehicle passes the fitness test, the owner has to pay a fee along with Green Tax to add an extra 5 years of life before the vehicle finally scraps. All the fitness tests will be done by automated fitness centres which will be set up by the government along with private companies. These automated fitness centres will be set up in various cities including smaller cities as well, however, the actual timeline is yet to be announced.
Based on the information available now, we have listed down the steps to scrap old car & get rebates & incentive on buying a new car
Private vehicle older than 20 years, if found unfit during the fitness test at the fitness centres or registration certificate of vehicle is not renewed will be deregistered
Car Owners to hand over such vehicles to a authorized vehicle scrapping centre along with the vehicle documents and copy of their Personal ID like PAN Card / Aadhar Card
The authorized vehicle scrapping centre to verify vehicle records and check in the stolen vehicle database before issuing Certificate of Deposit, needed for the car owner to avail incentives & rebate while buying a new car.
The owner can buy a new car from the authorized car dealer and submit the Certificate of Deposit. The certificate once the incentive has been availed will be cancelled
The Government will maintain a database of all cars scrapped every year to avoid malpractice.
The vehicles which are used for more than 15 years are bound to emit a lot more pollution than newer vehicles that are compliant with stringent emission regulations. With the help of the scrappage policy, the pollution levels from the unfit vehicles will drop along with the fuel imports with the replacement of old fuel guzzlers with new fuel-efficient cars. The sales of the new cars will also get a boost to support the Auto Industry. In addition to that, the parts of the scrapped vehicles will be sent to the concerned auto manufacturers for reuse and recycling.
According to Mr Nitin Gadkari, this policy would increase the Indian automobile market’s turnover by 30% and also create additional jobs. The market turnover is expected to increase from the current Rs 4.5 lakh crore to Rs 10 lakh crore in the coming years, however, no timeline for the same has been announced. As all the alloys and components like steel, plastic, rubber, aluminium etc will be reused and recycled, it can help to lower the costs of manufacturing by 30 - 40%. If the anticipated figures are to be believed, this policy will result in a win-win situation for both the buyers and carmakers. However, it’s not all sunshine and rainbows, the accurate implementation of the policy is important, that too at the preferable timeline. The Vehicle Scrappage Policy is expected to come into effect from April 2022, but this seems a bit optimistic, especially when we are in the middle of a pandemic.
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