Bhopal: In a significant move to promote vehicle scrapping and reduce pollution, the Madhya Pradesh Council of Ministers, chaired by Chief Minister Dr. Mohan Yadav, has approved a 50 percent exemption in motor vehicle tax on new vehicles registered against the “Certificate of Deposit.” The decision targets old vehicles manufactured under Bharat Stage I (BS-I) and Bharat Stage II (BS-II) emission norms to encourage scrapping at registered facilities in the state.
Key Highlights of the Motor Vehicle Tax Exemption Scheme
Eligibility: The exemption applies to new non-transport and transport vehicles registered with the “Certificate of Deposit” issued for scrapped vehicles complying with BS-I or BS-II emission standards.
Financial Impact: Approximately 99,000 BS-I and BS-II vehicles are currently operational in Madhya Pradesh. The 50% exemption is expected to impose a financial burden of around ₹100 crore on the state government.
Previous Benefits: The state provided a rebate of nearly ₹17.05 crore on 1,563 new vehicle registrations in 2024-25 under similar schemes.
Certificate Validity: The “Certificate of Deposit” is valid for 3 years from the date of issue and can be electronically transferred on the designated trading platform.
Restriction: Tax exemption is only applicable if the Certificate of Deposit is issued by a registered Vehicle Scrapping Facility (RVSF) in Madhya Pradesh. Certificates issued in other states are not eligible.
Read also: World EV Day 2025: CM Mohan Yadav Pushes Madhya Pradesh to Become India’s EV Manufacturing Hub
Incentives & Conditions for Vehicle Owners
Motor vehicle tax exemption applies only when the new vehicle is registered under the name of the person holding the Certificate of Deposit.
The exemption is available on the purchase of a new vehicle of the same category as the scrapped one.
For vehicles with lifetime tax, a one-time 50% exemption will be granted.
Vehicles paying monthly, quarterly, or yearly taxes will get 50% tax exemption for 8 years.
The exemption does not apply to vehicles that are not registered for motor vehicle tax under the government’s notification dated September 8, 2022.
Central Support for Vehicle Scrapping Promotion
Madhya Pradesh is set to receive special assistance of ₹200 crore from the Ministry of Road Transport and Highways, Government of India, to boost the registered vehicle scrapping facilities in the state. This initiative aligns with the national objective to phase out older, polluting vehicles and promote cleaner, more fuel-efficient automobiles.
Approval of Madhya Pradesh Nagar Palika (Amendment) Ordinance 2025
Apart from the vehicle tax exemption, the Council of Ministers approved the Madhya Pradesh Nagar Palika (Amendment) Ordinance 2025. This ordinance reinstates the direct election of Presidents of Municipal Councils by voters in the upcoming 2027 urban local body elections.
Background: From 1999 to 2014, Presidents of urban bodies were elected directly by voters. Due to the COVID-19 pandemic, elections could not be held in 2019. In 2022, the election process switched to an indirect system.
Ordinance Objective: The amendment will restore the direct election system for Municipal Presidents, ensuring voters directly elect their representatives in 2027.
Ensuring Environmental Protection
The Madhya Pradesh government’s decision to provide motor vehicle tax exemptions and revive direct municipal elections demonstrates its commitment to sustainable urban development and clean environment goals. With the support from the Central Government and innovative policies, Madhya Pradesh aims to foster growth while ensuring environmental protection.
