Tax rebates and benefits to know while scrapping your old vehicle Under the New Policy
Jan 03, 2026
5 min read
Team Mariinox
India's Vehicle Scrappage Policy (2021) introduced significant financial benefits, tax rebates, and incentives for owners who choose to phase out their aging vehicles in the proper, lawful manner. If you have a 10+, 15+, or 20-year-old car or bike, the policy now rewards you for scrapping instead of continuing costly repairs or facing penalties.
This guide explains all incentives, how to claim them, who qualifies, and what to expect during the scrapping process, including how authorized facilities (like the ones Mariinox works with) help make the process easier.
What Tax Rebates Do You Get When You Scrap a Vehicle?
Under the new policy, you can receive:
Up to 25% rebate on Road Tax for new private vehicles
Up to 15% rebate on Road Tax for new commercial vehicles
Up to 5% manufacturer discount when you show the Certificate of Deposit (COD)
Exemption from paying registration charges on the newly purchased vehicle
Additional state-level benefits (varies by location)
These incentives are tied to scrapping through an authorized RVSF, not local kabadi dealers.
Why the Government Introduced These Benefits
Old, unfit vehicles are major contributors to:
Air pollution
Road accidents
Fuel inefficiency
Noise pollution
Mechanical risk and breakdowns
The government’s goal is to encourage owners to retire high-polluting vehicles by replacing them with cleaner, safer, more efficient models-hence the structured rebate system.
Full List of Financial Benefits You Receive When You Scrap Your Vehicle
Road Tax Rebate
This continues to be the most impactful benefit.
Personal vehicles can get up to 25% savings.
Up to a 15% rebate for commercial-use vehicles.
This rebate is provided when you scrap an old vehicle and buy a new one.
Example Calculation
If your new car has a road tax of ₹80,000 →
With a 25% rebate, you save ₹20,000 instantly.
Manufacturer (OEM) Discount - 4-6%
Most vehicle manufacturers provide a minimum 5% discount on the new model when you submit the COD.
This applies to:
Cars.
Bikes.
Commercial trucks.
Buses.
Registration Fee Waiver
You do not have to pay registration charges for your new vehicle if you produce a valid COD.
Savings vary by state but commonly range from ₹1,500 to ₹5,000 for two-wheelers and ₹5,000 to ₹15,000 for cars.
Scrap Value Payout
In addition to rebates, you receive scrap value from the authorized scrapper based on:
Metal weight.
The amount of steel and aluminium present in the vehicle.
Current market valuation for recyclable metal materials.
Vehicle category.
Typical payouts:
Two-wheelers: ₹2,000 – ₹5,000
Small cars: ₹15,000 – ₹30,000
SUVs / Larger cars: ₹30,000 – ₹60,000
Vehicle category.
Systematic facilities-like the RVSFs partnered with Mariinox-determine scrap value transparently based on weight and material recovery.
Eligibility: Who Can Claim These Incentives?
You qualify if:
Your petrol vehicle has crossed the 15-year mark
Older than 10 years (diesel) in Delhi NCR
Has not passed the mandatory fitness assessment
Maintenance expenses have exceeded practical limits
You choose to voluntarily scrap it.
The key requirement is that the vehicle must be scrapped only at an authorized RVSF.
Step-by-Step Guide: How to Claim Scrappage Benefits
Claiming scrappage benefits under India’s Vehicle Scrappage Policy is simple, but only if you follow the correct steps and use an authorized scrapping facility. Below is a clear breakdown of everything you need to do-from preparing documents to receiving rebates on your new vehicle.
1
Scrap Your Vehicle at an Authorized RVSF
Begin by handing over your old vehicle to a certified Registered Vehicle Scrapping Facility. Only authorized centers can legally scrap your vehicle and issue the documents required for benefits.
2
Gather All Essential Documents
Prepare these items in advance:
RC (Registration Certificate)
Aadhaar/PAN
Bank details
Owner photo
Authorization letter (if RC holder isn’t present) Having everything ready speeds up the process.
3
Let the RVSF Inspect Your Vehicle
The facility will verify the chassis number, engine number, and overall condition. This ensures the vehicle matches official records.
4
Get a Fair, Weight-Based Valuation
Your compensation depends on:
Total metal weight
Steel and aluminum content
Current scrap metal rates Authorized scrappers provide transparent, GST-billed valuation.
5
Receive Your Certificate of Deposit (COD)
Once approved for scrapping, you will get the COD (certificate of deposit)—the most important document. This is what gives you access to the incentives under the Vehicle Scrappage Policy.
6
Vehicle Deregistration on VAHAN
The RVSF uploads scrapping details to the VAHAN portal. Your vehicle is officially marked as “Scrapped,” ensuring you have no future legal liability.
7
Receive Your Certificate of Vehicle Scrapping (CVS)
After dismantling, you’ll get the CVS, the final confirmation that your vehicle has been destroyed in compliance with government norms.
8
Use COD to Claim Your Benefits
With your COD, you can now claim:
Up to 25% road tax rebate (private vehicles)
Up to 15% rebate (commercial vehicles)
OEM discount on new vehicle purchase
Registration fee waiver for your new vehicle
These benefits are available nationwide, regardless of where you scrap.
Do’s & Don’ts When Scrapping to Claim Benefits
Do’s
Scrap only at authorized RVSFs
Verify the dealer’s government authorization
Keep RC + ID proof ready
Ensure COD is issued before handing over the vehicle
Cross-check VAHAN status
Dont's
Don’t scrap through unverified kabadiwalas
Avoid transactions where only cash payment is offered.
Don’t forget to take COD + CVS
Don’t delay the registration rebate application.
FAQ's
No-The Certificate of Deposit is essential.
No. Most follow the central guideline, but some offer additional rebates.
Yes. COD is valid nationwide.
No, you must submit COD during new vehicle registration.
COD is valid for 3 years.
Future Outlook
Companies working with organized recycling networks like Mariinox already follow these evolving standards, making future compliance smoother for owners.
More states expected to adopt higher road tax rebates
EV incentives may combine with scrappage benefits
Automated scrapping centers will expand
Stricter enforcement against illegal dismantlers
Higher material recovery rates (90%–95%)
Ready to Scrap Your Vehicle?
Get a free, no-obligation quote and see how much your old vehicle is really worth - without the stress of selling.
Scrapping an old vehicle isn’t just about disposing of metal. It’s a financial advantage, an environmental responsibility, and a legal safeguard. When done through proper channels-like authorized RVSFs and platforms supported by organized scrapping systems such as Mariinox-you ensure the procedure remains secure, fully aligned with regulations, and advantageous overall.
