Commercial Vehicle Green Tax & 15-Year Fitness / Scrappage Policy Rules in India (2026 Guide)

Published by Sunil Joshi on 08 September 2026

1. What is Green Tax / Clean Air Cess?

Green Tax (also codified as Environmental Pollution Cess or Clean Air Surcharge) is a statutory fiscal levy imposed on older motor vehicles under state motor vehicles taxation acts and the Central Motor Vehicles (Twenty Third Amendment) Rules, 2021.

The fundamental objective of Green Tax is two-fold:

1. Economic Disincentive: To penalize the continued operation of older, high-emission Euro-II/III/IV vehicles and encourage owners to upgrade to BS-VI or Electric Vehicles (EVs).

2. State Clean Air Fund: The collected revenue is deposited into state-level environmental funds used for public transit infrastructure, pollution monitoring sensors, and green corridors.

2. Applicability: Commercial (8 Yrs) vs Private (15 Yrs)

Under the Ministry of Road Transport & Highways (MoRTH) framework, Green Tax applies on two distinct timelines:

1. Commercial Transport Vehicles (Goods & Passenger):

  • Trigger Age: Levied as soon as the vehicle completes 8 years from its original date of registration.
  • Frequency: Charged annually at every subsequent Fitness Certificate renewal under Section 56 of the MV Act.
  • Rate Formula: Typically computed as 10% to 25% of the annual motor vehicle road tax.

    • 2. Personal / Private Non-Transport Vehicles (Cars & Two-Wheelers):

  • Trigger Age: Levied upon completion of 15 years at the time of renewal of Registration Certificate (RC) under Form 25.
  • Frequency: Charged for a 5-year renewal block.
  • Rate Formula: Up to 50% of the standard road tax or a fixed statutory slab.

    • 3. State-wise Green Tax Rates (MP, MH, DL, KA, UP, GJ)

    State / UTCommercial Goods & Taxis (>8 Yrs)Private Cars (>15 Yrs)Surcharge in Polluted Cities
    Madhya Pradesh10% of Annual Road Tax₹500 (2W) / ₹2,000 (4W)Additional 5% in Indore, Bhopal, Jabalpur
    Maharashtra10% - 20% of Quarterly/Annual Tax₹3,000 - ₹5,000 per 5 yrsMumbai Metropolitan Region (MMR) extra cess
    Delhi-NCRStrict 10-Yr Diesel / 15-Yr Petrol BanAutomatic De-registrationComplete ban under NGT orders
    Karnataka₹500 - ₹2,000 / annum₹500 (2W) / ₹1,000 (4W)High-emission diesel surcharge
    Uttar Pradesh10% of Road Tax₹2,500 per 5-year blockNCR districts (Noida, Ghaziabad) ban older diesels
    Gujarat10% of Annual Tax₹1,500 - ₹3,000 per 5 yrsAhmedabad, Surat clean air cess

    4. 15-Year Scrappage Policy & Mandatory ATS Testing

    Under the National Automobile Scrappage Policy (V-VMP):

  • Commercial vehicles exceeding 15 years can no longer renew fitness through manual visual inspections. They must pass through a Government-Authorized Automated Testing Station (ATS) equipped with computerized roller brake testers, suspension shakers, headlight beam aligners, and exhaust analyzers.
  • A commercial vehicle that fails the ATS test twice is legally classified as an End-of-Life Vehicle (ELV) and must be de-registered.

    • 5. RVSF Certificate of Deposit (CoD) & Road Tax Concessions

    When an end-of-life vehicle is handed over to an authorized Registered Vehicle Scrapping Facility (RVSF):

    1. Certificate of Deposit (CoD): The RVSF issues a digital, tradeable Certificate of Deposit on the National Vahan portal.

    2. Road Tax Concession: Presenting the CoD when purchasing a brand-new commercial vehicle grants:

  • Up to 15% road tax concession for transport / commercial vehicles.
  • Up to 25% road tax concession for non-transport / private vehicles.

    • 3. Registration Fee Waiver: Complete 100% waiver of new vehicle registration fees under Rule 52 of CMVR.

    4. Scrap Value Payout: The vehicle owner receives 4% to 6% of the ex-showroom value of the new vehicle as raw scrap metal value directly in their bank account.

    6. Agent Checklist for Deregistration under Section 55

    To legally scrap a vehicle and obtain the Certificate of Vehicle Scrapping (CVS):

  • Step 1: Clear All Liabilities: Ensure zero pending traffic e-challans on Parivahan and zero tax dues at the local RTO.
  • Step 2: Bank NOC (Form 35): If hypothecation is active, obtain the official loan closure letter.
  • Step 3: Submit to RVSF: Hand over the vehicle along with the original RC, PAN, and Aadhaar card.
  • Step 4: RTO Scrapping Intimation: The RVSF cuts the chassis frame, uploads video proof to Vahan, and issues the Certificate of Vehicle Scrapping (CVS), which formally deregisters the vehicle from the national register under Section 55.

    • 7. Useful Green Tax & Scrappage Tools

  • Commercial Vehicle Green Tax Calculator — Calculate state-wise environmental cess for commercial vehicles > 8 years.
  • Commercial Vehicle Fitness Late Fine Calculator — ₹50/day overdue penalty calculator.
  • Commercial Road Tax Calculator — State-wise road tax rates and quarterly slab tables.
  • Form 35 Hypothecation Cancellation — Generate instant loan closure and HP removal forms.
  • Form 20 Vehicle Registration Generator — New vehicle registration application generator.

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    Frequently Asked Questions

    When is Green Tax payable for commercial transport vehicles in India?

    For commercial transport vehicles (Trucks, Buses, Cabs), Green Tax is levied at the time of renewal of Fitness Certificate once the vehicle completes 8 years from its initial registration date.

    Can a 15-year-old commercial vehicle be renewed at the RTO?

    Under the National Automobile Scrappage Policy, commercial transport vehicles exceeding 15 years must undergo mandatory Automated Testing Station (ATS) inspection. Failing the test results in mandatory de-registration and scrapping.

    What is a Certificate of Deposit (CoD) issued by an RVSF?

    A Certificate of Deposit (CoD) is a tradeable digital certificate issued by a Registered Vehicle Scrapping Facility when an old vehicle is handed over for scrapping. It entitles the holder to up to a 25% road tax concession on a new vehicle purchase and full waiver of registration fees.

    What are the rules for diesel vehicles in Delhi-NCR?

    Under National Green Tribunal (NGT) and Supreme Court directives, all diesel commercial and private vehicles older than 10 years and petrol vehicles older than 15 years are strictly banned from operating in Delhi-NCR.

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