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What is Green Tax for Car and Bikes in India

The term “Green Tax,” which also refers to environmental or pollution taxes, is an excise duty imposed on products that pollute the ecosystem.

  • 21 Apr 2023
  • 5 min read
  • 3655 views

The term “Green Tax,” which also refers to environmental or pollution taxes, is an excise duty imposed on products that pollute the ecosystem. The economic theory claims that by incentivising households and businesses to adopt pollution-reduction practices, levies on emissions that create pollution will lessen the harm done to the ecosystem. Pollution is the expense of producing goods that the producer or polluter does not bear. Polluters who endanger the lives of other people and the environment are subject to vehicle green tax.

Indirect taxes on alternative policies or associated products like accepted technology standards can cut pollution, but they might be costly. For instance, increasing the price of gas does not encourage drivers to maintain their cars' pollution-control systems. Since such taxes encourage polluters to reduce pollution, carbon taxes are economically advantageous.

What is Green Tax?

Due to the emissions from their outdated engines, which pollute the environment, older vehicles in the country are subject to a Green Tax. As a result, the Green Tax is a fixed fee that owners of vehicles must pay on their outdated cars.

  • This tax applies to both household and commercial vehicles. The amount of the Green Tax varies by state and depends on the type of car as well.
  • Older cars negatively impact the environment by releasing gases or smoke. This also significantly increases pollution. Large trucks transporting goods from one place to another also add to air pollution. Since the Indian government has placed a Green Tax on older vehicles, it is imperative to limit their use.
  • A higher Green Tax is applicable to vehicles registered in heavily polluted regions like Delhi.
  • The Green Tax, implemented to lessen pollution, only applies to gasoline and diesel vehicles. It does not apply to vehicles that run on electricity, compressed natural gas, or ethanol.
  • The government uses the funds raised from the Green Tax to construct facilities for measuring emissions. The Green Tax should encourage the country’s people to switch to cleaner vehicles.

Why and When is Green Tax Levied on Vehicles?

Given the quickly deteriorating state of our environment, the government has decided to take action to reduce pollution levels. The Green Tax, which levies a fee on vehicles that don’t meet specific requirements, is one such measure. The Indian government is contemplating imposing a green tax on vehicles at the time of renewal of their registration documents. The owner will therefore be liable for any environmental harm. Over-eight-year-old commercial and more than 15-year-old privately owned vehicles will be subject to vehicle green tax.

There is a Green Tax imposed on those who drive polluting vehicles. Old cars with older motors are more likely to generate heavy pollution. The Green Tax acts as a behavioural restraint on people who continue to ignore global warming and drive polluting vehicles.

The tax is a tool for encouraging people to upgrade to more ecologically friendly technology or, at the very least, vehicles with a more negligible impact. Numerous companies are currently developing two- and four-wheel vehicles with reduced pollution levels. Sales of electric scooters are rising as more people realise how important it is to transition to better forms of transportation. The Green Tax initiative seeks to promote and facilitate scooter users’ transition to greener models.

Also read:

State-Wise Green Tax Liabilities in India

The amount of the green tax for cars and other vehicles may differ depending on the state in which you reside.

  • Government mandates that owners of commercial cars pay a Green Tax that can be between 10% and 25% of their unpaid road tax obligations. For instance, if their road tax is INR 6000, the highest Green Tax would be INR 1500.
  • Private vehicles may have to pay up to 50% of their required road taxes as green taxes. For instance, if the road tax is INR 6,000, the Green Tax could be as much as INR 3,000.
  • The exact Green Tax rate depends on how much pollution there is in your residential city. The car green tax is likely to be levied at the highest rates on residents of urban regions like New Delhi and Bihar.

Check out the Green Tax requirements in some Indian areas right away.

Maharashtra Green Tax

Vehicle Type

Tax Amount

Two-wheelers

INR 2000

Four-wheelers (Diesel)

INR 3500

Four-wheelers (Petrol)

INR 2000

Goa Green Tax

Vehicle Type

Tax Amount

Two-wheelers

INR 1100

Four-wheelers (Light Motor Vehicle)

INR 1760

Light Commercial Vehicle

INR 2200

Medium Motor Vehicle

INR 2640

Heavy Motor Vehicle

INR 4400

Tamil Nadu Green Tax

Vehicle Type

Tax Amount

Two-wheelers

INR 500

Four-wheelers

INR 1000

Ensure that along with getting a car insurance, you also pay the green tax while registering your car. As you can see, the four-wheeler and green tax for bike can vary significantly between states. Therefore, before renewing the registration certificate for your car, you should confirm the same for your state of residence.

How to Check & Pay Green Tax Online in India?

  • https://vahan.parivahan.gov.in/vahan/vahan/ui/eapplication/form_payment.xhtml
  • Step 2: Enter the vehicle registration number to use the "Pay your tax" tool.
  • Step 3: Push the forward arrow.
  • Step 4: From the drop-down option, choose "Pay your tax."
  • Step 5: Insert your mobile number to create an OTP.
  • Step 6: Enter the OTP texted to your registered mobile number.
  • Step 7: Click "Show details" on the page.
  • Step 8: After that, select the tax option.
  • Step 9: Click the Payment option and complete the online payment.
  • Step 10: Verify the transaction and choose a payment method.
  • Step 11: A notification will show following a successful payment.
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