Maharashtra Budget 2026: CM Devendra Fadnavis Announces Tax Concessions for Scrapping Old Vehicles, Environmental Tax on Ageing Cars to Increase

The Maharashtra government has unveiled a set of measures aimed at reducing vehicular pollution and upgrading the state’s vehicle fleet. While presenting the Maharashtra Budget 2026–27 in the state assembly on Friday, Chief Minister Devendra Fadnavis announced proposals that include tax concessions for people who scrap their old vehicles and purchase new ones. The budget also outlines an increase in environmental tax on certain ageing private vehicles along with other financial initiatives, including relief for farmers. According to the government, these measures are intended to improve air quality, promote the use of cleaner vehicles and support the state’s broader economic development objectives.

During his budget speech, Fadnavis proposed concessions in motor vehicle tax for individuals who choose to scrap older vehicles before buying new ones. As per the proposal, vehicle owners who scrap automobiles compliant with BS-4 and higher emission standards and then purchase a new vehicle will receive a 16 per cent concession in motor vehicle tax. Meanwhile, those who scrap vehicles that fall under BS-3 or older emission norms will be eligible for a larger concession of 30 per cent while buying a new vehicle. The initiative is designed to motivate vehicle owners to replace outdated automobiles with newer and less polluting models.

The chief minister said the policy is intended to encourage the gradual removal of ageing vehicles that significantly contribute to pollution levels. Older vehicles often consume more fuel and release higher emissions compared with modern vehicles built under stricter environmental standards. By offering tax incentives for scrapping such vehicles, the government aims to accelerate the transition to cleaner and more efficient automobiles across the state. Fadnavis emphasised that the policy will help discourage the continued use of highly polluting vehicles while simultaneously promoting improved air quality and environmental sustainability in Maharashtra.

Alongside these incentives, the government has also proposed stricter measures for certain older vehicles through higher environmental taxes. Fadnavis stated that non-transport or private vehicles that comply with BS-4 or older emission standards produce higher levels of pollution. As part of the new policy, the environmental tax levied on such vehicles will be doubled. The move forms a key component of the government’s broader strategy to control vehicular emissions and encourage vehicle owners to shift towards modern automobiles that meet stricter pollution control norms.

In addition to the pollution-control initiatives, the budget also introduced a proposal to cap taxes on crane-mounted vehicles used in heavy operations. According to Fadnavis, the motor vehicle tax applicable to crane-mounted vehicles will now be limited to a maximum of Rs 30 lakh. The decision is expected to provide financial relief to companies and operators working in the infrastructure and construction sectors, where such specialised heavy equipment is widely used. By introducing this cap, the government aims to reduce operational costs while continuing to support infrastructure development activities across Maharashtra.