The Gujarat government has announced a concession of up to 50 per cent in Motor Vehicle Tax (MVT) for vehicle owners who scrap eligible old vehicles at authorised facilities and purchase new ones, with the benefit directly linked to a Certificate of Deposit (COD) issued after the scrapping process. The notification, issued by the state's Ports and Transport Department, comes into effect from 1 October 2026 and covers CODs issued up to 31 March 2027.

Which Vehicles Are Eligible

The concession applies to transport and non-transport vehicles manufactured under Bharat Stage-I (BS-I) and earlier mass emission standards. It also extends to all medium and heavy goods motor vehicles and medium and heavy passenger motor vehicles manufactured under Bharat Stage-II (BS-II) standards. Notably, the policy specifically targets the oldest and most polluting vehicle categories still in circulation on Gujarat's roads.

How the COD-Linked Concession Works

An owner who scraps an eligible vehicle through an authorised scrapping facility receives a Certificate of Deposit (COD). This document must be presented at the time of registering a new vehicle to claim the applicable MVT concession. The government has retained its existing methodology for calculating Motor Vehicle Tax, with the discount applied over and above the standard computation as per prescribed rules.

Critically, the COD is single-use — once a tax concession has been claimed against a COD issued for a particular scrapped vehicle, no further concession can be claimed on the basis of that same vehicle. This one-time-per-vehicle rule is intended to prevent misuse of the scheme.

Deadline and Key Conditions

Only CODs issued on or before 31 March 2027 will qualify under the new provision. Vehicle owners seeking the benefit must therefore complete the authorised scrapping process and obtain their COD within this window. The notification makes clear that the scrapping must occur at a recognised, authorised facility — informal or unregistered dismantling will not qualify for the concession.

Why This Matters: Emission Policy and Fleet Renewal

The move aligns with the Union government's Vehicle Scrappage Policy, which has been progressively encouraging states to phase out pre-BS-IV vehicles from Indian roads. Gujarat's MVT concession provides a direct financial incentive to accelerate fleet turnover, particularly among commercial vehicle operators — owners of medium and heavy goods or passenger vehicles — who stand to benefit the most given higher registration tax amounts on new vehicles.

This comes amid a broader national push to reduce vehicular pollution. India tightened emission norms to BS-VI standards for new vehicles from 1 April 2020, meaning BS-I and BS-II vehicles on the road are now significantly behind current standards. For Gujarat's transport sector, the scheme represents a time-limited opportunity to reduce fleet operating costs while contributing to air quality goals. Industry watchers will now observe how quickly eligible commercial vehicle owners act before the March 2027 deadline.