Motor Vehicle Tax, commonly referred to as road tax, is a tax imposed on vehicles suitable for use on roads.

The authority to impose taxes on vehicles is primarily available to state legislatures under Entry 57 of the State List in the Seventh Schedule of the Constitution.

However, the principles according to which taxes on mechanically propelled vehicles may be levied fall under Entry 35 of the Concurrent List.

The amount and method of payment may differ across states and generally depend on factors such as:

• Type and category of vehicle
• Cost of the vehicle
• Seating or loading capacity
• Fuel type
• Age of the vehicle
• Private or commercial use

Motor Vehicle Tax is different from the vehicle registration fee. Under the PARIVARTAN Scheme, concessions are available for both.

Motor Vehicle Tax Concessions under PARIVARTAN

The scheme’s approved framework provides:

• Up to 100% Motor Vehicle Tax concession for eligible new replacement vehicles.
• Up to 50% Motor Vehicle Tax concession for eligible used replacement vehicles.
• Concessions for a period of 10 years.
• Waiver of registration fees.
• Waiver of specified pending liabilities on old vehicles participating in the scheme.

The four participating governments have issued notifications for Motor Vehicle Tax concessions and registration-fee waivers under the scheme.

PARIVARTAN Scheme

Full Form

PARIVARTAN: Programme for Accelerated Renewal and Incentivization of Vehicle Assets for Reducing Transport Air Pollution and Network Emissions.

Objective

It is a time-bound fleet-modernisation scheme aimed at replacing old and highly polluting trucks and buses operating in the NCR with:

• Bharat Stage-VI vehicles
• Vehicles complying with emission standards stricter than BS-VI
• Electric vehicles

Its broader objective is to reduce transport-related air pollution and promote cleaner mobility in Delhi-NCR.

Approval and Institutional Framework

• Union Cabinet approval: 3 June 2026
• Operational guidelines approved: 16 July 2026
• Guidelines approved by: Ministry of Housing and Urban Affairs
• Implementing Ministry under the operational guidelines: Ministry of Road Transport and Highways
• Funding channel: National Capital Region Planning Board
• Participating regions: NCR areas of Delhi, Haryana, Rajasthan and Uttar Pradesh

The Cabinet-approved framework also envisaged an implementation role for the Ministry of Petroleum and Natural Gas, particularly in relation to fuel-based support.

Financial Outlay

• Total outlay: ₹9,585 crore
• Central government budgetary support: ₹5,041 crore
• Estimated tax concessions by participating states: ₹1,601 crore

The scheme has a two-year enrolment period, while specified Central Government benefits may continue for five years from the registration of the replacement vehicle.

Eligible Vehicles

The scheme covers trucks and buses registered in the Delhi-NCR region that comply with:

• BS-IV emission norms; or
• Emission norms older than BS-IV.

Government-owned vehicles are excluded.

BS-III and older vehicles

Such vehicles must mandatorily be scrapped at a Registered Vehicle Scrapping Facility.

BS-IV vehicles

Owners may either:

• Scrap the vehicle at a Registered Vehicle Scrapping Facility; or
• Sell it outside the NCR, but only in cities or towns not covered under the National Clean Air Programme.

The owner must subsequently purchase and register an eligible cleaner replacement vehicle within the NCR.

Special Conditions for Delhi

For replacement vehicles registered in Delhi:

• Light Goods Vehicles must be electric.
• Replacement buses must be either BS-VI CNG or electric.

These conditions are stricter than the general provisions applicable across the wider NCR.

Incentives under the Scheme

Central Government support

• 5% interest subvention on vehicle loans for five years.
• Monthly fuel vouchers of up to ₹4,800, depending on the vehicle category.
• One-time financial support for eligible electric replacement vehicles.
• Lump-sum support linked to Certificate of Deposit trading.

State government support

• Motor Vehicle Tax concessions.
• Registration-fee waiver.
• Waiver of specified pending liabilities on old participating vehicles.

Support from manufacturers

Participating Original Equipment Manufacturers must provide a minimum 8% discount on the ex-showroom price of eligible replacement vehicles.

As of 16 July 2026, 11 OEMs accounting for more than 95% of the commercial-vehicle market had signed agreements with the government.

Digital Implementation

The scheme will operate through an integrated digital platform connected with:

• VAHAN
• V-Scrap
• DigiELV
• Public Financial Management System
• Participating lenders
• Fuel-voucher systems

The platform will facilitate eligibility verification, benefit transfers, interest-subvention claims and monitoring of pollution-reduction outcomes.

Monitoring Mechanism

The scheme will be monitored by an Empowered Committee chaired by the Cabinet Secretary.

Its members include representatives from:

• NITI Aayog
• MoHUA
• MoRTH
• MoPNG
• Department of Financial Services
• NCR participating states
• NCR Planning Board

District Collectors or District Magistrates will supervise implementation at the district level.

Expected Beneficiaries

The scheme is expected to benefit approximately 2.07 lakh vehicle owners, including:

• Around 1.91 lakh truck owners
• 16,329 bus owners

Environmental Significance

Although trucks and buses constitute only around 3% of the vehicle fleet, they account for nearly 36% of PM2.5 emissions from the transport sector in Delhi-NCR.

A single pre-BS heavy-duty vehicle is estimated to emit as much as 14 BS-VI vehicles, while a BS-IV vehicle emits approximately 2.7 times more than a BS-VI vehicle. Replacing these vehicles can therefore generate substantial emission reductions.