In a landmark move towards promoting sustainable transport and environmental accountability, the Central Government has proposed a new policy linking road tax rates with the level of vehicle emissions. The idea is to incentivize the use of low-emission and electric vehicles while imposing higher tax rates on high-polluting vehicles, including those with older combustion engines. The proposal, which is under review by the Ministry of Road Transport and Highways (MoRTH), is part of the broader national strategy to combat air pollution and reduce carbon footprints in urban areas.

According to senior officials, the proposed framework will categorize vehicles based on their emission ratings, which include factors like CO2 output, engine type, and fuel efficiency. Vehicles that meet or exceed the most stringent emission norms (such as BS-VI compliant or electric vehicles) could benefit from lower or zero road tax, while vehicles with outdated technology may attract progressively higher taxes. This approach aims to shift consumer behavior towards cleaner alternatives and align India’s transport policies with its climate commitments under international agreements.

The policy is expected to undergo consultations with state governments, as road tax is currently a state subject. However, the Centre plans to offer a model roadmap and financial incentives to encourage adoption. If implemented, this would mark a significant step toward a green taxation regime in the transport sector, potentially influencing how vehicles are bought, sold, and used across the country. Experts believe the linkage of taxation with emissions will drive innovation and push manufacturers to develop cleaner and more efficient technologies.