SC-appointed panel asks for 20-22% green cess on diesel vehicles in NCR

New Delhi: The Environment Pollution (Prevention and Control) Authority (EPCA) for the National Capital Region (NCR) has recommended a green cess of 20-22% on diesel vehicles. In a report submitted to the Supreme Court (SC) on Monday, EPCA recommended a cess of 20% on the cost of vehicles with engines that are smaller than 1,500cc in size, and 22% on those over 1,500cc. If the

EPCA’s recommendations are accepted, the cess for the present range of diesel vehicles in the national capital could translate to anywhere between Rs.1-2 lakh. The main reason behind EPCA’s recommendation is to remove the existing incentive for buying diesel vehicles. “Removing the fuel price differential, through the imposition of ECC (environment compensation charge) will be a step in removing the incentive for diesel vehicles. This is needed to reduce public health risk as diesel emissions are among the more harmful pollutants,” the EPCA recommended in its note.

In December 2015, SC banned the sale of diesel vehicles with engine capacity of 2,000cc or more in Delhi-NCR area. The ban was initially instituted for a period of three months and was subsequently extended with no deadline.

Subsequently, automakers and the government approached the court seeking relaxation of the ban. However, the court on Monday reserved its order on their plea.

On Monday, the centre asked a bench headed by Chief Justice T.S. Thakur for modification of the ban order while stating that imposing an environmental cess in lieu of lifting the ban could not be undertaken by a court.

Interestingly, luxury car makers like Mercedes Benz and Toyota, which claimed they were the worst hit by the ban order since most of their diesel cars had engines that are bigger than 2,000cc, have offered to pay a much lower 1% green cess on the sale of their cars.

“The average under recovery of taxes compared to respective petrol variant in this class (less than 1500cc) of diesel cars is about Rs.179,766. This is the difference in fuel taxes paid by petrol car users and diesel car users. This on an average works out to be an average of 20% of the cost of diesel cars in this class,” said the note submitted by EPCA to the court.

Similarly for cars whose engine capacity is more than 1500cc, the committee said: “The average under recovery of taxes compared to respective petrol variant in this class of cars is about Rs.215,883.”

“Though this amount is higher than that of the smaller segment, this amount works out to be an average of 22% of the cost of diesel cars in that class as these cars are more expensive,” EPCA said.

The committee’s report is, however, not the last word on the environment cess on diesel vehicles as the apex court is awaiting inputs of various stakeholders, including the centre, after which a final order will be passed.