India's transport ministry proposes 'green' tax on old, polluting vehicles

By Aditi Shah

NEW DELHI (Reuters) - India's road transport ministry on Monday approved a proposal to levy additional taxes on old vehicles that are unfit and pollute the environment, as the South Asian nation tries to improve the air quality in its major cities.

The so-called 'green tax' will be levied on all vehicles depending on their fuel type of petrol or diesel, but those operating on clean technologies like hybrids, electric or ethanol will be exempt, the ministry said in a statement.

India is home to some of the world's most polluted cities, including its capital New Delhi, and the ministry has proposed a higher tax on vehicles registered in such cities.

"Green tax will reduce the pollution level, and make the polluter pay for pollution," it said.

According to the proposal, private vehicles older than 15 years could be taxed higher as would transport vehicles older than eight years if they don't meet the criteria at the time of renewing their fitness certificate.

"Revenue collected from the green tax would be kept in a separate account and used for tackling pollution," it said, adding that all state governments will be consulted before the proposal is finalised.

(Reporting by Aditi Shah)