Vehicle Scrappage Policy India 2026: Complete Guide to Rules, Green Tax & Incentives

What is the Vehicle Scrappage Policy?

India's National Vehicle Scrappage Policy, announced in 2021 and progressively implemented since 2023, aims to phase out old, polluting vehicles from Indian roads. The policy introduces mandatory fitness testing, Green Tax surcharges, and financial incentives to encourage owners to scrap old vehicles and buy new, cleaner ones.

As of 2026, the policy is fully operational with over 80 Registered Vehicle Scrapping Facilities (RVSFs) across India and mandatory fitness testing for government vehicles already in effect.

Key Rules You Need to Know

Age Limits for Vehicles

Personal Vehicles: Must undergo fitness testing after 15 years from the date of initial registration
Commercial/Transport Vehicles: Must undergo fitness testing after 8 years from the date of initial registration
Government Vehicles: Mandatory scrapping after 15 years (already enforced since April 2023)

Fitness Testing Process

Vehicles exceeding the age limit must pass a mandatory fitness test at an Automated Testing Station (ATS). The test evaluates:

Emission levels — Must meet prescribed pollution norms
Brake efficiency — Minimum stopping distance standards
Headlight alignment — Proper beam pattern verification
Structural integrity — No critical rust, frame damage, or safety hazards
Noise levels — Within permissible decibel limits

Green Tax: The Environmental Surcharge

Vehicles that pass the fitness test must still pay a Green Tax (Environmental Compensation Charge) at the time of RC renewal. The rates vary by location:

Green Tax Rates

Highly Polluted Cities (Delhi NCR, Lucknow, Patna): Up to 50% of road tax
Tier 1 Cities (Mumbai, Bangalore, Chennai): Up to 25% of road tax
Other Areas: 10-15% of road tax

Use our Green Tax Calculator to estimate your exact renewal cost based on vehicle type and city.

Incentives for Scrapping Your Old Vehicle

If you choose to scrap your vehicle instead of renewing the RC, you receive several benefits:

Certificate of Deposit (CoD) Benefits

25% rebate on road tax for the new vehicle purchased
Up to 5% discount from vehicle manufacturers on the new vehicle price
Registration fee waiver for the new vehicle in many states
Scrap value of the old vehicle (typically ₹5,000-₹40,000 depending on vehicle condition)

How to Scrap Your Vehicle

Visit a Registered Vehicle Scrapping Facility (RVSF) near your city
Submit your vehicle along with RC, insurance documents, and ID proof
The RVSF will inspect and issue a Certificate of Deposit (CoD)
Use the CoD to avail discounts on your new vehicle purchase within 2 years
The RVSF will deregister the old vehicle with the RTO

Should You Renew or Scrap?

The decision depends on your specific situation:

Consider Renewing If:

Your vehicle is in good mechanical condition and passes the fitness test
The Green Tax + renewal fees are significantly less than buying a new vehicle
You drive less than 5,000 km per year (lower environmental impact)

Consider Scrapping If:

Maintenance costs have been rising consistently
The vehicle fails or barely passes the fitness test
You're planning to buy a new vehicle anyway — the CoD benefits make it cheaper
You want to switch to an EV — electric vehicles are 100% exempt from Green Tax and road tax in most states

Electric Vehicles: The Smart Alternative

If you're facing Green Tax on an old vehicle, consider switching to an Electric Vehicle (EV). EVs enjoy:

0% Green Tax — Lifetime exemption
0% Road Tax in most Indian states
5% GST vs 28%+ for petrol/diesel vehicles
₹1 per km running cost vs ₹6-8 per km for petrol

Use our EV Savings Calculator to see how much you could save by switching to electric.