A Comprehensive Guide to A Green Tax for Cars in India

Posted on: Jun 2, 2023 | | Written by:

A Comprehensive Guide to A Green Tax for Cars in India

Published on May 26, 2023. EST READ TIME: 3 minutes

Green tax is also termed environmental tax or pollution tax. It is nowadays mandatorily levied against everything that proves to be the cause of environmental pollution. For private vehicles above 15 years, the Central Government has introduced the green tax implementation while renewing the RC.

What is green tax?

Green tax is a special excise duty on those goods that prove to be the reason for raising environmental pollution. The economic theory states that charging higher taxes on pollution-causing agents will eventually lead to behavioural alterations to maintain the ecological balance, maintaining a sustainable approach.

The adverse effects of toxic environmental pollution have to be borne by everybody, whether they contribute towards it or not. Such rising pollution levels cause climate change, several types of health ailments and numerous other effects.

The green tax targets to punish the polluters as a form of penalty for causing harm to the society and environment at large. Any tax charged due to direct emission proves to be cost-effective and offers a clear hint to take necessary measures for reducing environmental pollution.

Green tax for cars

The implementation of the green tax on Indian vehicles is a comparatively recent concept. However, Delhi bears CCTV cameras and RFID tags at the entry points for checking the emission level of every vehicle that enters the city. Depending on the size and capacity of the concerned vehicle, any high-emitting vehicle is charged with ECC or the Environmental Compensation Charge.

Each time any such vehicle passes through the city, they need to pay this charge, depending on its size. For dual-axle trucks and other lightweight vehicles, this amount is INR 1400 and for three and four-axle trucks, it amounts to INR 2600.

State-wise green tax liabilities in India

The total amount payable on account of green tax is decided not only on the size of the concerned vehicle, but it also varies from one state to another. As per the government regulation, a vehicle owner needs to pay 10-25% of their overall tax liability as green tax depending on the circumstances. So, if the road tax is INR 6000, the optimum green tax payable limit should be INR 1500.

In the case of private vehicles, they need to bear the green tax of up to 50% of their total road tax liabilities. If the road tax amounts to INR 6000, then the maximum amount charged for green tax is INR 3000.

The accurate rate of the green tax changeability depends on the pollution level of your concerned residential city. In this context, the residents of Patna and New Delhi need to pay the optimum level of green tax.

The amount of green tax charges among some of the major Indian states is as follows:

Maharashtra green tax norm:

Vehicle type	Tax Amount
For two-wheelers	INR 2000
For diesel four-wheelers	INR 3500
For petrol four-wheelers	INR 3000

Goa green tax norm:

Vehicle type	Tax Amount
Two-wheelers	INR 1100
Four-wheelers	INR 1760

Tamil Nadu green tax norm:

Vehicle type	Tax Amount
Two-wheelers	INR 500
Four-wheelers	INR 1000

However, most of the states follow a standard rule of green tax applicability on commercial vehicles:

Commercial Vehicle Type	Green Tax Liability
Six-seater taxis	INR 1250
Service vehicles	2.5% of the yearly tax amount
Contract buses	2.5% of the yearly tax amount
Auto rickshaws	INR 750
Vehicles over 7500 kg capacity	10% of the annual tax
Light goods vehicles	INR 2500
Tourist buses	2.5% of the yearly tax amount

How to check and pay green tax liabilities in India

The Indian government has implemented a user-friendly method to check and clear the green tax liability dues using a simple digital method, with just a few taps and clicks on your smartphone or computer. It is a matter of minutes. The steps are as follows:

1. First, visit the official VAHAN web portal.

2. Enter the relevant credentials to log in to your registered account.

3. Enter the concerned vehicle’s registration number to proceed.

4. Click on the tab “Pay Your Tax”.

5. Enter your registered mobile number.

6. Complete the OTP verification procedure and select the relevant tax option.

7. Now you can clear off your tax dues using online/digital banking payment methods.

FAQs

1. Can I skip the green tax payment?

No. If your vehicle falls under this category you need to compulsorily clear the green tax dues within the due date to avoid any future legal consequences.

2. Are there any vehicles that are exempted from paying green tax?

All CNG-based vehicles and EVs are exempted from paying green tax.

3. Is the green tax the same everywhere?

No. Depending on the level of pollution of the residential state, the amount of green tax gets decided.

4. Is maintaining car insurance necessary, if I clear off the green tax?

Irrespective of the circumstances, you must maintain car insurance if you own a car. It can be a simple third party insurance to maintain legal standards or it can be an elaborate comprehensive insurance .

Conclusion

This is a comprehensive guide to the implementation and implication of green tax on vehicles in India. It is to discourage the usage of older vehicles that are responsible for causing heavy environmental pollution. This green tax norm encourages the adoption of an eco-friendly and sustainable approach. This exclusive initiative seeks enhanced promotion and implementation of vehicle owners’ transition to comparatively greener models.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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