What is Green Tax ?

Green Tax:
  • Green tax is also called as pollution tax or environmental tax and is the tax levied on all the goods that cause environmental pollution. 
  • It is believed that charging tax on emissions will help bring about changes in firms and households.
  • As per the Latest update, the Central Government has proposed to charge green tax on the renewal of registration certificate of personal vehicles after 15 years. 
  • The centre has also proposed lower green tax for commercial vehicles and higher green tax for vehicles plying in highly polluted cities across the country.
  • As it is also called, is an excise duty on goods that cause environmental pollutants. 
  • According to Economic theory, charging taxes on emissions that cause pollution will lower environmental impairment in a cost-effective manner by encouraging behavioural changes in households and firms that need to decrease their pollution.
  • Green tax is an environmental tax that aims at ensuring that polluters are duly punished for the activities that deter the environment by charging them a penalty for the harm caused to others. 
  • Charging direct taxes to perpetrators on emissions is an economical means to provide them with an incentive to lower their pollution to the extent where further reduction could potentially turn out to be more expensive than paying the tax itself.
  • Green Tax on Vehicles:
  • Green tax on vehicles in India is a relatively new trend, but RFID tags are being given and CCTV cameras have been deployed at border entry points in Delhi to ensure that commercial vehicles that enter the city will be monitored for emissions. 
  • ECC (Environmental Compensation Charge) will be imposed on pollutants depending upon the vehicle’s size. 
  • The original fines levied by the government ranged between Rs.700 and Rs.1300 for two-axle trucks and three- and four-axle trucks respectively, but charges have doubled since with light vehicles and two-axle trucks urged to pay Rs.1400 and three- and four-axle trucks paying Rs.2600 every time they pass through the city.
Green Tax for Cars and Two Wheelers:
  • The government of Maharashtra decided to impose a green tax on private vehicles that are older than 15 years, while commercial vehicles used for over eight years will also be subject to the tax. 
The tax applicable to private vehicles older than 15 years are as follow:
  • Two wheelers         Rs.2000
  • Diesel vehicles Rs.3500
  • Petrol vehicles         Rs.3000
  • The tax will have to be paid every five years.
  • The tax applicable to commercial vehicles older than eight years is as follows:
  • Autorickshaws                                    Rs.750
  • Light good vehicles                            Rs.2500
  • Six-seater taxis                            Rs.1250
  • vehicles with more than    7500 kgcapacity 10% of annual tax
  • Service vehicles                                         2.5% of annual tax
  • Contract buses                                         2.5% of annual tax
  • Tourist buses                                                 2.5% of annual tax
  • Green tax or Environment Compensation Charge was introduced in October 2015, in Delhi. 
  • Revisions made to the original document ever since are based on recommendations from the Supreme Court. There may be a ban on registration of diesel vehicles that come with an engine capacity of more than 2000cc. 
  • The government of Delhi is also considering the extension of Section 194 of the Motor Vehicles Act which does not permit the entry of commercial vehicles to Delhi at particular times. 
  • As per this section, the government could levy a fine of a minimum of Rs.2000 for violating this rule.