Green Tax in India Explained: Is Your Car On The List?

Author: Abhinand Venugopal•Published on: 1/2/2026•7 Minutes
Overview:Owing to substantial growth in automotive sales, India has witnessed a spike in pollution in recent years. Older and more polluting vehicles have started to pose a major environmental challenge. In response, the Indian government implemented the Green Tax policy to reduce the use of high-emission vehicles and to encourage the masses to switch to cleaner choices, such as EVs and petrol-hybrids. Green Tax, often referred to as ‘pollution tax’ or ‘environmental tax’, is primarily aimed at keeping emissions within permissible limits. These limits are gradually tightened over time.  The policy was formally introduced by the Ministry of Road Transport and Highways (MoRTH) in April 2022. The money collected under this policy is maintained in a separate account by each Indian state and used solely for pollution control efforts.
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Key Highlights:


  • Green Tax varies across Indian states, but there’s a guideline to be followed.
  • It was introduced by the Ministry of Road Transport and Highways (MoRTH) in April 2022.
  • Old, heavy commercial vehicles travelling across the country and through pollution-sensitive zones may be the biggest victims of green taxation.



Vehicles That Come Under Green Tax


Green Tax does not apply to every vehicle on the road. It mainly focuses on older vehicles, particularly petrol- or diesel-powered cars that have crossed a specific age limit. Green Tax is usually levied at the time of renewal of the vehicle’s registration or fitness certificate.


Commercial Vehicles
Diesel-powered commercial vehicles are among the biggest contributors to vehicular pollution. The list includes trucks, buses, and goods carriers that are more than 8 years old.


Private Vehicles
Petrol and diesel private vehicles that are more than 15 years old fall under the scope of the Green Tax. The tax is imposed at the time of re-registration.


Interstate Transport
Transport vehicles from other states or districts that enter highly sensitive urban zones may also be charged a Green Tax. This is especially common in metro cities such as Delhi, Mumbai and Bengaluru.


Vehicles Exempt from Green Tax


Although Green Tax is imposed to lessen the impact of polluting vehicles, some categories are exempt from it because they either use cleaner sources of energy or serve critical public utility functions. The exemptions aim to encourage the use of clean and alternative fuel technologies while ensuring that essential services are not placed under additional financial strain. The list includes:


  • Electric vehicles (EVs)
  • Compressed Natural Gas (CNG) vehicles
  • Hybrid vehicles
  • Tractors used for farming
  • Vehicles used for defence or law enforcement
  • Vehicles running in hilly and remote areas

Green Tax Rates: How Much is Charged?


Green Tax rates are not uniform across the country, but are decided by the respective State Transport Departments. For instance, a diesel truck may attract a Green Tax of up to ₹5,000 to ₹10,000 annually. The variations generally depend on these factors:


  • Type and age of the vehicle
  • Category (personal or commercial purposes)
  • Existing pollution levels and environmental concerns in that particular Indian state

General Guideline Suggested by MoRTH


Although State Governments have the power to set their individual Green Tax rates, the MoRTH has implemented a guideline as follows:


  • Transport vehicles older than 8 years: 10 to 25 per cent of road tax at the time of renewal.
  • Personal vehicles older than 15 years: a fixed amount depending on engine capacity and fuel type.
  • Higher rates in sensitive regions.

Variation in Green Tax Across Indian States


Since states can decide their own tax structure, there is a significant variation in Green Tax rates across India. Let us explore a few main examples:


Maharashtra

  • One of the first states to implement Green Tax effectively
  • Tax varies from ₹1,000 to ₹10,000 based on vehicle type and capacity
  • Green Tax applies to both commercial and private vehicles
  • Public transport vehicles receive some concessions

Karnataka

  • Charges Green Tax during fitness certificate renewal for vehicles older than 15 years
  • Two-wheelers: ₹250
  • Four-wheelers: ₹500 to ₹3,000 based on engine size
  • The Karnataka State Government has taken steps to identify old commercial vehicles subject to green taxation through automated systems

Delhi

  • Strictest implementation in the country due to severe air pollution index
  • Diesel vehicles older than 10 years and petrol vehicles older than 15 years are banned altogether
  • Renewal of registration is not allowed for vehicles of that age. Hence, Green Tax is not applicable as such vehicles cannot legally operate

Tamil Nadu

  • Imposes Green Tax on private vehicles older than 15 years at the time of registration renewal
  • Commercial vehicles attract Green Tax during fitness renewal
  • Rates are relatively moderate compared to Maharashtra

Kerala

  • Charges Green Tax yearly
  • Light motor vehicles more than 15 years old: ₹1,000 to ₹1,500
  • Commercial vehicles: ₹2,000 to ₹5,000
  • Exemption for electric vehicles and those running on LPG or CNG

Green Tax Collection and Utilisation


The money collected through the Green Tax is intended to be used only for environmental projects. As mentioned at the beginning, the Central Government seeks to link tax collection with environmental welfare by ensuring that the revenue collected is directed solely towards efforts in pollution control and ecological improvement.


The goal is to establish a complete cycle where financial resources support environmental sustainability. The funds collected go towards the following:

  • Setting up vehicle emission testing centres
  • Establishing scrappage centres
  • Promoting public transport infrastructure
  • Developing EV charging stations
  • Creating green zones in urban centres
  • Educating citizens on eco-friendly driving practices

Integration with Vehicle Scrappage Policy


The Vehicle Scrappage Policy introduced by the Government of India complements the Green Tax policy. To elaborate, if the Green Tax on an unfit vehicle is too high, it might no longer be financially sensible for the owner to keep it. This can encourage a switch to cleaner alternatives. Under this policy:


  • Vehicles that are deemed unfit after 15 to 20 years can be scrapped voluntarily.
  • Incentives such as discounts on new vehicles and waivers on registration fees are provided to those who comply.

Public Reception and Challenges


While the Green Tax has a clear environmental motive, its implementation has witnessed mixed reactions. Let us take a look at the positives and negatives:


Positive Feedback

  • Environmental groups have welcomed it as a step towards reducing urban air pollution.
  • It supports the push for EV adoption and cleaner mobility solutions.
  • It promotes sustainable development, a key to healthy future generations.

Prevailing Concerns

  • Some vehicle owners, particularly in rural areas, find the tax burdensome.
  • There is limited awareness about the policy among the general public.
  • Implementation is uneven, especially in states without strict enforcement.
  • Corruption and a lack of infrastructure for emission testing may reduce the effectiveness of the policy

The Way Forward


For the policy to succeed in the long run, it requires the following:

  • Uniform enforcement across states
  • Strong coordination between the Central and State Governments
  • Greater public awareness campaigns
  • Development of efficient scrappage facilities
  • Subsidies and incentives to promote EVs and hybrids
  • Urban planning and better public transport systems

Green Tax is still in its early stages. However, it can make a meaningful impact on air quality and support the adoption of cleaner mobility if implemented effectively.


FAQs


1. Which vehicles are affected by Green Tax?
Typically, transport vehicles older than 8 years and personal vehicles older than 15 years are subject to Green Tax.


2. Is Green Tax applicable to private cars too?
Yes, private vehicles older than 15 years may have to pay Green Tax when renewing registration.


3. When is Green Tax paid?
Green Tax is usually paid at the time of renewal of the vehicle’s registration, which is after 15 years for private vehicles and after 8 years for commercial ones.


4. What is the revenue from Green Tax used for?
The funds collected are typically used to tackle pollution and develop infrastructure for cleaner transportation.


5. Do all states in India have the same Green Tax rules?
No, Green Tax rates and rules may differ across states, depending on local pollution levels and transport policies.