It's high time, India should revamp Automobile Taxation and make it environment friendly
I think a very good idea to force manufacturers would be adopt a tiered tax structure based on engine emission and fuel efficiency.
The current structure based on cost of the vehicle, engine size and fuel option leaves no incentive for manufacturers to make cleaner vehicles apart from natural competition in the industry. With current structure, they'll continue to meet engine size / car length / ground clearance guidelines irrespective of the fact that they might be using old engine technology with high Carbon Emissions.
Most of the European countries have also adopted tiered taxation based on vehicle emissions irrespective of the overall size of the vehicle.
For reference, I am providing the tax bands followed in UK:
Band CO2 emission (g/km) 12 months rate
A Up to 100 £0.00
B 101-110 £20.00
C 111-120 £30.00
D 121-130 £110.00
E 131-140 £130.00
F 141-150 £145.00
G 151-165 £180.00
H 166-175 £205.00
I 176-185 £225.00
J 186-200 £265.00
K* 201-225 £285.00
L 226-255 £485.00
M Over 255 £500.00
With above example, you'll notice how the tax rates increase exponentially for high emission vehicles. Making them less attractive for the market.
Additionally, it'll bring much needed rationalization in automobile taxation. more