The Centre on Monday approved a proposal to impose “green tax” on old vehicles causing pollution. Farming vehicles such as tractors and vehicles running on compressed natural gas and other alternative fuels will be exempted from the new tax.

The Ministry of Road Transport and Highways said in statement that it will send the proposal to states for consultation before formal notification.

Transport vehicles older than 8 years will be charged tax at the time of the renewal of fitness certificate. “Personal vehicles to be charged Green Tax at the time of renewal of Registration Certification after 15 years,” the government added.

The government said that public transport vehicles, such as city buses, will be charged a lower tax rate. Differential tax rates will be charged depending on the fuel. Apart from CNG vehicles, those running on ethanol, liquefied petroleum gas and electricity will also be exempted from the tax.

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Vehicles registered in cities with high pollution levels will be charged a higher tax rate. It will be 50% of the road tax. Money collected through the imposition of the tax will be used to set up emission-monitoring facilities in the states, the government said.

The Centre added that the new tax will discourage people from using vehicles causing environmental damage. “Green tax will reduce the pollution level, and make the polluter pay for pollution,” it added.

Delhi and its neighbouring areas struggle with worsening air pollution during the winter months from October to December. Climate conditions, stubble burning and Diwali crackers lead to the deterioration of air quality.