The 28th GST Council Meet scheduled for this Saturday could make a final call on the Vehicle Scrap Policy. Reportedly, the policy is aimed at giving a major boost to the replacement of commercial vehicles older than 20 years with new ones at minimum GST. Under the scheme, less GST would be levied on the new commercial vehicles which would replace the old ones. On the hindsight, the Government hopes that the policy would indirectly lessen the dependence on imported steel.
The Vehicle Scrap Policy
The Vehicle Scrap Policy has been proposed by the Ministry of Road and Transportation. Under the proposed scheme, commercial vehicles older than 20 years have to be essentially excluded from the road. The vehicles under consideration would be sold as scrap. To promote the policy, the reduced GST rates could be put into effect.
The Ministry of Finance and the Prime Minister’s Office have given their approval for the policy implementation. It awaits the green signal from the GST Council post which it would be put into effect. The GST Council would supposedly discuss the proposed GST relaxation on Saturday’s meet.
What happens to the Scrapped Vehicles?
Mr Aruna Sharma, Secretary Central Steel Ministry, in a May event had informed that rules and regulations formulated under this Vehicle Scrap Policy will facilitate production of steel from the older vehicles scraps.
Nitin Gadkari, Union Minister Road Transport and Highways of India, had said in March that the Policy will be a boon to the country’s economy as it will reduce the reliance on steel industry imports. With this, the government hopes that the country’s steel industry will be able to grow well and better quality steel can be made in the country itself.
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Also, a report by CRISIL suggests that the Vehicle Scrap Policy would benefit 6 lakh 40 thousand commercial vehicle owners in the next 3 years.
GST Rate May Come Down To 12 Percent
New Commercial Vehicles attract 28% GST. If the GST Council approves the proposed tax relaxation under the Vehicle Scrap Policy, this luxury tax slab on commercial vehicles would be reduced to 10-12 %. However, this scheme is valid if only the owners buy new commercial vehicles as a replacement for their 20 years older ones.
