What is Green Tax?

The Ministry of road transport has decided to impose the additional taxes on old vehicles that are no more fit on road. This additional tax is being called as the “Green Tax”. Th decision was taken to curb pollution. It will also motivate people to switch to environment-friendly alternatives to the vehicles.


  • The Green tax will reduce the pollution level.
  • It will also make the polluter to pay for creating pollution.
  • Revenue collected from the green tax will be kept in a separate account. The amount will be used for tackling the problem of pollution.
  • The states have been asked to set up state-of-art facilities to monitor the emission.

How the vehicles will be taxed?

  • Under the Green Tax norms, the transport vehicles older than eight years will be charged with the green tax at the time of renewal of fitness certificate. They will be charged at the rate of 10 to 25% of road tax.
  • While, the Public transport vehicles like city buses will be paying lower Green Tax.
  • However, the vehicles used in farming like tractor and harvestor will be exempted from the tax.

What is Green tax?

Green tax is also called as the pollution tax or environmental tax. The tax is an excise duty on goods that results into the environmental pollutants. An economic theory says, that if taxes will be charged on emissions causing pollution will lower the environmental impairment in a cost-effective manner. The tax will encourage the behavioural changes in households and firms that are required to reduce the pollution. The tax mainly aims to ensure that polluters are duly punished for their pollution creating activities.

Green Tax in India

This tax in India is relatively new trend. However, the RFID tags are being given and CCTV cameras have been deployed at border entry points. With this, the commercial vehicles that enter the city are monitored for emissions. In the cities like Delhi, Environmental Compensation Charge (EEC) is imposed on pollutants depending upon the vehicle’s size.




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