Higher Green Tax on Older Cars, Better Scrapping Incentives in Maharashtra, Per Proposed Budget

The Government of Maharashtra’s proposed budget for FY 2026-27, introduced by Chief Minister Devendra Fadnavis on Saturday, includes provisions aimed at incentivising owners of older vehicles to replace them with newer, less polluting ones in order to reduce emissions, improve air quality, and improve overall fuel efficiency. The proposed budget is yet to be ratified by the state cabinet.

Aiming to encourage owners of older cars to retire them while also easing the burden of replacing them, the state could soon tax older private cars with less stringent emissions ratings much more heavily.

The environment tax, or “green tax” on private non-transport BS-IV and earlier vehicles is set to double. Under the proposal, petrol cars will be taxed at ₹6,000, up from ₹3,000 and diesel ones at ₹7,000, up from ₹3,500. Bikes are also included, with tax rising to ₹4,000 from ₹2,000.

To soften the blow, owners scrapping a BS-IV vehicle will qualify for a 16 percent tax rebate on the replacement, while BS-III and older models will get their owners a 30 percent tax rebate. This move could accelerate the modernisation of the state’s road fleet. The move brings private vehicles in line with government-owned ones in terms of scrappage requirements.

Other parts of the country, particularly Delhi NCR, have been in the news for stringent rules for banning or retrofitting older vehicles. All government vehicles older than 15 years must compulsorily be scrapped. Autorickshaws older than 15 years and taxis older than 20 years are also not allowed on roads. 

The Government of Maharashtra has also passed measures to encourage the adoption of EVs, including scrapping a proposed tax on high-end electric models in last year's budget, toll waivers on major roads, incentives on purchases for electric cars and buses, and a complete rebate on registration fees. The state's comprehensive 2025 EV Policy sets a roadmap for 30 percent EV adoption by 2030, one of the most ambitious targets in India, with an emphasis on strengthening charging infrastructure and EV manufacturing.