Key Points:
- Up to 50% road tax discount for scrapping old vehicles and buying new ones
- Private vehicles older than 10-15 years eligible for 25-50% rebate
- Commercial vehicles also qualify for significant tax concessions
- Must scrap at government-approved Registered Vehicle Scrapping Facility (RVSF)
- Certificate of Deposit required to claim discount on digital portal
- Policy aims to remove polluting vehicles and improve air quality
The Rajasthan government has launched a groundbreaking vehicle scrappage policy, offering unprecedented financial incentives for replacing old vehicles. Under this scheme, vehicle owners can receive a discount of up to 50 percent on road tax when purchasing a new vehicle after scrapping their old one. This initiative, announced by the state transport department, represents one of the most generous scrappage incentives in India and could benefit approximately 2.3 million vehicle owners across the state.
The policy specifically targets vehicles that have exceeded their optimal lifespan; private vehicles older than 10-15 years and government vehicles over 15 years old qualify for the program. For a typical mid-size car with a road tax of ₹50,000, the 50% discount translates to savings of ₹25,000, making new vehicle purchases substantially more affordable for middle-class families. Two-wheeler owners can save between ₹3,000 and ₹ 8,000, depending on the vehicle’s engine capacity and original tax amount.
How the Scrappage Process Works
Vehicle owners must follow a straightforward four-step process to avail these benefits. First, they need to take their old vehicle to a government-approved Registered Vehicle Scrapping Facility (RVSF). Rajasthan currently has 12 operational RVSFs in major cities including Jaipur, Jodhpur, Kota, and Udaipur, with plans to add 20 more facilities by March 2026. These centers use environmentally friendly methods to dismantle vehicles and recover recyclable materials.
After depositing the vehicle, owners receive a Certificate of Deposit (CD), which serves as the primary document for claiming the tax rebate. This certificate contains a unique identification number and details about the scrapped vehicle. When purchasing a new vehicle at any authorized dealership, buyers must upload this certificate to the state transport department’s digital portal, “Rajasthan Vehicle Tax Management System.” The software automatically calculates and deducts the applicable discount from the road tax, streamlining the entire process.
Environmental and Safety Objectives
The Rajasthan government’s decision serves three critical objectives that address pressing state concerns. Controlling pollution stands as the primary goal, as vehicles older than 10 years emit up to 10 times more pollutants than Bharat Stage VI compliant vehicles. Rajasthan’s cities, particularly Jaipur and Kota, have witnessed deteriorating air quality, with PM2.5 levels frequently exceeding safe limits during winter months. Removing these polluting vehicles could reduce vehicular emissions by an estimated 35% in major urban centers.
Road safety constitutes the second major objective. Older vehicles lack modern safety features such as ABS, airbags, and electronic stability control, making them significantly more prone to accidents. Data from the state transport department reveals that vehicles over 10 years old are involved in 40% of fatal accidents despite comprising only 25% of the total vehicle population. Brake failures, steering malfunctions, and tire bursts in aging vehicles contribute to hundreds of preventable deaths annually.
Economic Impact and Industry Boost
The third objective focuses on stimulating Rajasthan’s automobile sector, which contributes approximately ₹18,000 crore to the state economy and employs over 200,000 people directly and indirectly. The tax incentives are expected to generate additional sales of 150,000-200,000 vehicles in the first year alone, providing a much-needed boost to dealerships and manufacturers. Maruti Suzuki, Hyundai, and Honda have already reported increased inquiries from Rajasthan customers since the policy announcement.
Commercial vehicle operators stand to benefit significantly, as goods carriers and passenger vehicles older than 10 years can qualify for tax rebates of up to 40%. This is particularly important for Rajasthan’s logistics sector, which operates over 300,000 commercial vehicles. Fleet owners can modernize their vehicles while reducing operational costs and improving fuel efficiency by 20-25% with newer models.
Relief for Middle-Class Families
This initiative provides substantial relief for middle-class families who have been delaying vehicle purchases due to financial constraints. A typical family scrapping a 12-year-old car and buying a new compact SUV priced at ₹12 lakh would normally pay approximately ₹60,000 in road tax. Under the new policy, they would pay only ₹30,000, saving enough money to cover the first year’s insurance premium or several months of fuel costs.
The policy also addresses the maintenance burden of old vehicles, which often require frequent repairs costing ₹20,000-30,000 annually. By facilitating the transition to new vehicles with warranty coverage and better fuel efficiency, families can reduce their overall transportation expenses by an estimated 15% per year. Additionally, scrapping centers offer an average payment of ₹15,000-25,000 for the metal and parts recovered from old vehicles, providing immediate cash that can be used toward the down payment for a new purchase.
Implementation Timeline and Future Plans
The policy became effective immediately upon announcement and will remain in force for three years, until December 31, 2028. The transport department has allocated ₹50 crore for the first year to compensate for revenue loss from reduced tax collection. Officials project that while road tax revenue may decrease initially, the overall economic activity generated through increased vehicle sales will offset these losses through higher GST collections and employment generation.
Looking ahead, the government is considering additional incentives such as reduced registration fees for electric vehicles purchased under the scrappage policy and priority parking permits for new vehicles in municipal areas. These measures would further align with Rajasthan’s commitment to sustainable development and smart urban planning.
