The benefits of vehicle scrapping in India come in two parts. A Registered Vehicle Scrapping Facility (RVSF) pays the vehicle owner an agreed scrap value when the vehicle is handed over. The owner also receives a Certificate of Deposit (CD), which can be used to claim applicable incentives on an eligible replacement vehicle.
These two forms of value work differently. The RVSF payment is paid for the scrapped vehicle itself. The CD does not represent an additional cash payment; it is used to access benefits such as applicable motor vehicle tax concessions, registration fee waivers and participating manufacturer discounts.
Financial Benefits of Vehicle Scrapping
The value available after scrapping comes from different sources, so the benefits should not be presented as four payments made by the same party. The RVSF pays the scrap consideration, while the government and participating vehicle manufacturers provide separate benefits subject to their respective rules.
Material value: The RVSF pays the agreed consideration for the scrapped vehicle. MoRTH's policy material has used an indicative scrap value of around 4% to 6% of the ex-showroom price of a new vehicle, but this is not a guaranteed payout. The actual amount is negotiated between the RVSF and the registered owner.
Motor vehicle tax concession: The central framework provides for a concession of up to 25% for non-transport vehicles and up to 15% for transport vehicles. The actual concession is implemented by the relevant State or Union Territory (UT), so it should not be presented as a uniform national rate.
Registration fee waiver: MoRTH's current annual report states that registration fees are waived for vehicles purchased against a Certificate of Deposit (CD). The applicable registration process is completed when the replacement vehicle is registered.
Manufacturer discount: Participating Original Equipment Manufacturers (OEMs) provide separate discounts. MoRTH's 2024–25 Annual Report records discounts of up to 3% for participating commercial vehicle manufacturers, while participating passenger vehicle manufacturers agreed to the lower of 1.5% or ₹20,000. Mercedes-Benz separately announced a ₹25,000 discount.
MoRTH also records that 23 States and Union Territories had announced motor vehicle tax concessions as of its 2024–25 Annual Report. State-specific concessions can differ from the central framework.
For example, Maharashtra's 2026–27 Budget proposed a 30% motor vehicle tax concession for owners scrapping BS-III or older vehicles and purchasing a new vehicle, while a 16% concession was proposed for BS-IV and newer vehicles. Because this is a Maharashtra-specific measure, it should not be presented as the national scrappage rate.
Environmental Benefits of Scrapping Old Vehicles
Scrapping an old vehicle can reduce the environmental impact associated with keeping older, higher-emitting vehicles on the road. Authorised scrapping also ensures that fluids, batteries, metals and other vehicle components are handled through a regulated dismantling and recycling process rather than informal disposal.
Facilities must address several categories of material before the vehicle is dismantled:
Batteries: Batteries are removed and sent through the prescribed recycling or waste-management route.
Fuel, oils and other fluids: Fuel, oil, antifreeze and other fluids must be drained and collected before scrapping.
Hazardous components: Items such as refrigerants, mercury-containing switches, airbags and certain other hazardous materials require controlled handling under the applicable guidelines.
Recoverable metals: Ferrous and non-ferrous materials are separated for recycling or recovery where applicable.
Vehicle scrapping gives an owner two distinct forms of value, but they should not be treated as one payout. The Registered Vehicle Scrapping Facility (RVSF) pays the agreed scrap consideration for the old vehicle, while the Certificate of Deposit (CoD) provides access to applicable replacement vehicle incentives. The second part depends on the rules of the State or Union Territory and participating manufacturer.
That makes the CoD worth planning around rather than treating it as paperwork received after scrapping. It is valid for three years, can be used for an eligible replacement vehicle, and can be electronically traded under the prescribed mechanism if the owner does not intend to use it personally. In that case, owners can explore how tosell Certificate of Deposit through the authorised trading mechanism - DigiELV.
Depending on the applicable rules, vehicle scrapping can provide payment for recoverable vehicle material, along with possible road tax concessions, registration fee benefits and manufacturer discounts when a qualifying replacement vehicle is purchased.
The financial value can include the amount paid by the Registered Vehicle Scrapping Facility (RVSF), applicable road tax concessions, registration fee benefits and manufacturer discounts. The exact amount depends on the vehicle, state rules and replacement vehicle purchase.
Scrapping older, higher-emitting vehicles can help reduce emissions when they are replaced with newer vehicles meeting current emission standards. The actual reduction depends on the vehicle being retired, its condition and the emission standards of its replacement.
Yes. A vehicle does not necessarily have to be non-running to be voluntarily scrapped. Whether scrapping is appropriate depends on its registration status, fitness, condition and the applicable vehicle scrappage rules.
Commercial vehicles can be subject to different fitness and scrappage requirements from private vehicles. The benefits available after scrapping depend on the applicable central and state rules, as well as the conditions attached to the Certificate of Deposit (CoD).