Indian Economy and Issues Relating to Planning, Mobilization, of Resources, Growth, Development and Employment



Recently, the Centre announced its plans to impose a “green tax” on older vehiclesin amove to disincentive the use of polluting vehiclesand to curb pollution in the country.


  • The Ministry of Road Transport and Highwayswill levy a green tax ontransport vehicles older than eight yearsat the time of renewal of fitnesscertificateat the rate of 10% to 25% of road tax.
  • The revenue collected through the green tax will be kept in a differentaccount and will only be utilised for tackling pollution.


Vehicles like strong hybrids, electric vehiclesand those running on alternatefuels like CNG, ethanol and LPG and vehicles used in farming, such as tractor,harvesters and tillers will be exempted.

 Differential Taxation:

  • Personal vehicles are proposed to be charged green tax at the time of renewalof registration certification after 15 years.
  • Public transport vehicles,such as city buses, will be charged lower green tax.
  • Higher green tax (50% of road tax)will be levied on vehicles beingregistered in highly polluted cities.
  • Differential tax will also be charged depending on fuel (petrol/ diesel) and thetype of vehicle.

Combat Health Hazards by Vehicular Pollution:

  • The major pollutants likecarbon monoxide (CO), nitrogen oxides (NOx), photochemicaloxidants, lead (Pb), particulate matter (PM), can have direct as well asin-direct impact, like reduced visibility, cancers, respiratory and cardiovascularailments, increased mortality, morbidity and impaired pulmonary function.

Carbon Pricing:

It is an instrument that captures the external costsof greenhouse gas (GHG) emissions the costs of emissions that thepublic pays for such as:

  1. Damage to crops,
  2. Health care costs from heat waves and droughts and
  3. Loss of property from flooding and sea level rise.

Carbon pricing ties them to their sources through a price, usually inthe form of a price on the carbon dioxide (CO2) emitted.

Criticism of the Green Tax:

  • Imposing additional tax on Public transport such as buseswill transfer the burden on the public which is already suffering income lossespost pandemic crisis.
  • There are already high rates of taxation on petrol and diesel, greentax will further spike the burden on vehicle owners.
  • Green tax will contribute in increasing the overalltransportation cost which could surge the overall inflation.

Way Forward

  • Fighting air pollution is a public issue and subsequentlyeverybody’s responsibility. Therefore, along with measures like green tax, the need isfor concerted and coordinated efforts with active involvement of all the stakeholders.
  • This should include the Government (national, state and local governments), cities,community at large and individuals.



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