What is the Green Tax on Bikes After 15 Years?

Posted on: Jul 4, 2024 | 3 mins | Written by: HDFC ERGO Team

What is the Green Tax on Bikes After 15 Years?

Considering the dire consequences of global warming and climate change, governments worldwide have been trying to implement various policies to check pollution and promote eco-friendly practices. One such initiative by the Indian government is levying a green tax on old vehicles. The aim of this is to discourage the use of old vehicles and thereby limit vehicular emissions.

What is the Green Tax?

Green tax, also called environment or pollution tax, is a fixed charge the Government of India imposes on all vehicles that emit dangerous levels of exhaust, polluting the environment. Levying this tax is advantageous for the following reasons:

- minimises overall pollution by discouraging people from using old, unsustainable vehicles

- acts as a catalyst encouraging citizens to shift to renewable energy sources, which are more environment-friendly.

Green tax on bikes after 15 years

In January 2021, the Union Minister of Road Transport and Highways proposed that commercial vehicles older than eight years and private vehicles older than 15 years be liable to pay a green tax as their outdated engines emit significantly high pollutants. However, only petrol or diesel bikes are subject to this fee—you are exempt from paying green taxes if you own a CNG or electric vehicle.

How is the green tax calculated?

Green tax is calculated as a proportion of a state’s road tax. Since the road tax varies across states, the green tax differs accordingly. The exact rate is also dependent on the pollution levels of cities. Therefore, Delhi residents are likely to bear the highest green tax in India. Vehicle owners must pay green tax for bikes after 15 years of owning them, during each renewal of their automobile’s registration certificate (RC).

The government mandates the green tax on private vehicles be up to 50% of the total road tax. For instance, if the road tax is Rs. 6000, the maximum green tax can be Rs. 3000. Owners of commercial vehicles are liable to pay 10-25% of their road taxes as the green tax. For example, if the road tax is Rs. 6000, one would have to pay a maximum green tax of Rs. 1500.

Conclusion

The green tax applies to all vehicles, both commercial and private, running on diesel and petrol. It is necessary to address the problem of environmental pollution. Clearing off your green tax is just as crucial as having an appropriate bike insurance policy. The former is to protect the environment and the latter is to safeguard the vehicle.

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

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