GST reduction on purchasing a new vehicle, who scrap old vehicles : Nitin Gadkari

Union Minister Nitin Gadkari has stated that the government is considering extra tax reductions for new automobiles purchased after old ones are scrapped. The announcement was made at the inauguration of a scrapping facility for Maruti and Toyota in Noida, Uttar Pradesh.

Prime Minister Narendra Modi formally launched the National Automobile Scrappage Policy in August 2021, which allows new automobile owners to save up to 25% on road tax and pay no registration fees. According to Gadkari, talks with the GST council are underway to lower the overall tax on new auto owners who scrap their old cars. The GST Council and the Finance Ministry will make the final decision on this matter.

Read Also: GST rise on textile, footwear to negatively impact working capital of MSMEs: Experts

The scrappage strategy is seen as crucial in reducing air pollution by the government. It will also result in a 10-12 percent increase in new car sales, boosting GST collections for both the state and Central governments by Rs 40,000 crore each. The reduction in GST is expected to come from this additional collection of taxes.

The GST Council and the Finance Ministry still yet to issue a decision on this matter, but it is expected to be soon, as the government has been proactively pushing for less-polluting and safer vehicles on Indian roads, and the scrappage policy is a vital step toward achieving this aim.

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