MAHARASHTRA BUDGET PUSHES VEHICLE SCRAPPAGE WITH HIGHER GREEN TAX ON OLD CARS

The Maharashtra Government in its recent 2026-27 budget has announced a proposal to double the green tax on older cars and provide incentives for scrappage of ageing vehicles and purchase of new ones. It is important for Indian car buyers as it will drastically increase the cost of keeping older cars on the road and encourage them to transition to newer models. The proposal is part of the state’s plan to curb vehicular emissions and promote scrappage of older vehicles. For car owners in Maharashtra, the announcement will impact the decision to keep an old car and transition to newer models.

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Green Tax Proposed To Double For Older Vehicles

Under the proposed budget measures, green tax on older vehicles will rise 100% in Maharashtra. The tax is levied on vehicles that have crossed a certain age (15 years) and are more polluting than newer vehicles.

By increasing this tax twofold, the government wants to deter the continued use of ageing vehicles that are a big source of urban air pollution. The tax would be applicable to both older cars and two-wheelers once they cross the age limit set for vehicles under current vehicle rules. Owners of older vehicles would have to pay more as they renew their registration or fitness certificate.

Under the proposal:

- Two-wheelers: green tax rises from Rs 2,000 to Rs 4,000

- Petrol light motor vehicles: from Rs 3,000 to Rs 6,000

- Diesel light motor vehicles: from Rs 3,500 to Rs 7,000

These higher rates will kick in as vehicle owners renew registrations or fitness certificates on older vehicles. The policy’s intent is to make it less rewarding to hold on to older vehicles over time.

Incentives Introduced For Vehicle Scrappage

The Maharashtra Budget also introduces tax concessions of up to 30% for owners of older vehicles for scrapping them, in addition to the higher tax proposal. Buyers availing a scrappage certificate while buying a new vehicle may be eligible for some tax relief on state levies.

The idea here is to make scrapping a preferred option so that owners opt to replace older vehicles with newer ones that meet the latest emission norms. The scrappage linked incentives could be applicable to both passenger vehicles and two-wheelers based on the final guidelines.

The policy echoes the national vehicle scrappage programme to take unfit vehicles out of India’s roads.

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Impact On Car Owners In Maharashtra

For vehicle owners, the proposal is a straightforward financial decision. Retain an ageing vehicle and accept a high green tax charge, or scrap it and mitigate the cost of buying a new vehicle. The move may also impact the used-car market as vehicle owners may consider scrapping rather than retaining their vehicle long term.

The Maharashtra Budget measures, if implemented as proposed, can speed up vehicle replacement cycles and help minimise older vehicle emissions in the state.

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2026-03-09T03:46:27Z