Maharashtra budget offers tax breaks for scrapping old vehicles, doubles green tax on polluters

• ET Online

• Published On Mar 6, 2026 at 04:21 PM IST

Presenting the 2026–27 state budget, Chief Minister Devendra Fadnavis said buyers scrapping older vehicles will receive concessions in motor vehicle tax.

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The Maharashtra government on Friday proposed tax incentives for scrapping older vehicles and purchasing new ones, while doubling environmental tax on certain ageing private vehicles, as part of measures aimed at reducing pollution and modernising the state’s vehicle fleet.Presenting the 2026–27 state budget in the assembly, Chief Minister Devendra Fadnavis said buyers who scrap older vehicles and replace them with new ones will receive concessions in motor vehicle tax.Under the proposal, a 16 per cent concession in motor vehicle tax will be offered to those scrapping vehicles compliant with BS-4 and higher emission norms and purchasing new vehicles. Buyers scrapping BS-3 and older vehicles will be eligible for a 30 per cent concession, he said.At the same time, the government plans to double environmental tax on older non-transport (private) vehicles with BS-4 and below emission standards, citing their higher contribution to air pollution.

“These steps are intended to discourage the use of fuel-inefficient and polluting vehicles, accelerate fleet modernisation and improve air quality in the state,” Fadnavis said in his budget speech.

The government also proposed a cap on tax for crane-mounted vehicles under the Motor Vehicles Act, limiting it to a maximum of ₹30 lakh.

The measures are part of the state’s broader effort to curb vehicular emissions and encourage the replacement of older vehicles with cleaner, more efficient models.