Vehicle Scrapping Policy 2026: Government Incentives, RVSF List and the Fleet Window Closing Fast

Updated: June 27, 2026 · 16 min read

As of April 2025, every Central and State Government vehicle older than 15 years was legally required to report for scrapping — not as a policy suggestion, but as a binding obligation under the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021. The Ministry of Road Transport and Highways (MoRTH) has since doubled down with state-level circulars, and the fitness certificate regime for commercial vehicles is being used as the operational lever to enforce compliance. For fleet operators, transport companies, and auto dealers sitting on ageing inventory, the question is no longer whether to scrap — it is whether you will do it on your own terms, with the incentives still on the table, or on the government’s terms, when the concessions have been clawed back.

The 2021 Rules That Set This Entire Machine in Motion

The foundational legal instrument governing India’s End-of-Life Vehicle (ELV) framework is the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021, notified by MoRTH under the Motor Vehicles Act, 1988. These rules created the RVSF registration regime, defined what constitutes an end-of-life vehicle, prescribed the process for issuing Certificates of Deposit (CoD) and Certificates of Vehicle Scrapping (CoVS), and established the age-based mandatory scrapping calendar that fleet operators now face.

Alongside the 2021 Rules, the Central Motor Vehicles (Amendment) Rules, 2022 refined the automated fitness testing infrastructure and tightened the re-registration norms for vehicles older than 15 years (for personal vehicles) and 10 years (for commercial transport vehicles in certain categories). The practical consequence: a 10-year-old commercial goods carrier that fails its automated fitness test at a National Automated Testing Station (NATS) can no longer be informally “passed” by a regional transport office inspector. The test data is uploaded centrally to the Vahan portal, leaving no administrative grey area.

The third regulation sitting beneath all of this is the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, administered by the Central Pollution Control Board (CPCB). An RVSF handling lead-acid batteries, lubricating oils, catalytic converter materials and refrigerant gases from scrapped vehicles must hold valid CPCB authorisation under these rules. This creates a compliance dependency that many smaller or informal vehicle dismantlers cannot satisfy — which is precisely why the RVSF registration process weeds them out, and why choosing an RVSF from the official MoRTH list matters legally, not merely administratively.

What the Certificate of Deposit Actually Gets You: The Real Numbers

The Certificate of Deposit is the single most valuable document the vehicle scrapping policy 2026 framework produces for the end-user. It is issued by a registered RVSF at the point of vehicle deposit and triggers a cascade of financial concessions that, taken together, make scrapping a commercially rational decision rather than a bureaucratic chore.

Registration Charge Waiver

MoRTH’s notification under the 2021 Rules specifies that State Governments are advised to offer a waiver of up to 25% on motor vehicle tax on the purchase of a new vehicle against a valid CoD. Separately, a registration fee waiver of up to 5% applies on the new vehicle’s ex-showroom value. For a commercial truck or bus priced at ₹28 lakh, this 5% registration saving alone translates to ₹1.4 lakh — before counting the scrap value realised from depositing the old vehicle.

GST Concession on New Vehicle Purchase

The GST Council, at its 43rd meeting, recommended a 25% reduction in the applicable GST rate on new vehicle purchases made against a valid CoD. Since passenger vehicles attract GST at 28% plus cess, a 25% concession on the GST component on a ₹15 lakh vehicle yields a saving of approximately ₹1.05 lakh. For commercial fleet operators replacing five or ten vehicles simultaneously, the aggregate saving becomes a material line item in the capital expenditure budget.

Scrap Value Itself

Beyond the downstream incentives, the vehicle itself has residual metal value. A mid-size commercial goods vehicle (gross vehicle weight 7.5–12 tonnes) yields approximately 1.2–1.8 tonnes of ferrous scrap and 40–80 kg of non-ferrous material (aluminium, copper wiring, brass fittings). With mild steel (MS) scrap rates ranging ₹32–₹38/kg across Mumbai and Pune yards in Q1 2026, and aluminium at ₹110–₹130/kg, the gross scrap value from a single commercial vehicle can reach ₹55,000–₹90,000 before deductions. A reputable RVSF will provide a written price quote before deposit.

The RVSF List in 2026: Who Is Registered, and Where the Gaps Are

MoRTH maintains a public register of Registered Vehicle Scrapping Facilities on the Vahan portal. As of early 2026, approximately 80–90 RVSFs hold provisional or final registration across India — a number that sounds substantial until you map it against the estimated 15 million end-of-life vehicles requiring disposal over the next three to five years, as projected by NITI Aayog in its circular economy policy working papers.

The geographic concentration problem is significant. The bulk of registered RVSFs cluster around Delhi-NCR (Haryana and UP periphery), the Mumbai Metropolitan Region, Pune, Ahmedabad, Chennai and Bengaluru. States like Jharkhand, Chhattisgarh, Assam and Odisha have minimal or zero RVSF coverage, meaning fleet operators headquartered in Tier-2 and Tier-3 cities must either transport vehicles to the nearest registered facility or risk using an unregistered scrapper — which voids all CoD benefits and potentially exposes the operator to liability under the Hazardous and Other Wastes Rules, 2016 if the vehicle’s hazardous fluids are not disposed of correctly.

Provisional vs. Final Registration: Why It Matters to You

The 2021 Rules distinguish between provisional registration (valid for 6 months, pending physical inspection and infrastructure verification) and final registration (valid for 10 years, renewable). A CoD issued by a provisionally registered RVSF is valid for the incentive scheme, but fleet operators should confirm the RVSF’s registration status on the Vahan portal before deposit. At least three provisional registrations lapsed without conversion to final status in 2024-25, leaving depositing customers in a documentation dispute with their State transport departments over CoD validity. Always get the RVSF’s registration number and verify it independently.

Government Fleet Deadlines: The Window That Has Already Partially Closed

For Central Government ministries and departments, the deadline for scrapping vehicles older than 15 years was 1 April 2025. MoRTH issued formal communications to all ministries through the Department of Expenditure framework, directing that budget allocation for new government vehicle procurement be linked to proof of scrapping of the replaced vehicle via a CoD or CoVS. State Governments were directed to follow suit, with most state transport secretariats issuing corresponding orders through 2024.

The practical reality is uneven compliance. Many states — particularly those with large Public Works Department and State Road Transport Corporation (SRTC) fleets — have been slow to route vehicles through RVSFs, partly due to proximity issues and partly due to procurement inertia. MoRTH’s enforcement mechanism runs through the Vahan database: from April 2025, any government vehicle older than 15 years attempting to renew its registration or fitness certificate triggers an automatic flag. Regional Transport Offices are instructed to deny renewal and direct the vehicle to the nearest RVSF. This creates operational disruption for state agencies that have not proactively scrapped their fleet — a disruption that is, by design, meant to be painful enough to accelerate compliance.

For municipal corporations and urban local bodies — which operate some of the oldest fleets in India, including solid waste management trucks, water tankers and street-sweeping vehicles — the compliance backlog is acute. Several Municipal Corporations in Maharashtra and Uttar Pradesh have vehicles in active service that are 20+ years old. The risk is not merely regulatory: ageing vehicles contribute disproportionately to both air quality degradation and road accident statistics, which is the policy justification MoRTH has consistently cited for the mandatory timeline.

Commercial and Private Fleet Operators: Why the Next 12 Months Are Different

For commercial transport operators — logistics companies, inter-city bus operators, school transport providers, e-commerce last-mile fleets — the vehicle scrapping policy 2026 dynamic is slightly different from the government fleet situation. Commercial vehicles over 15 years old that fail automated fitness tests are already being denied fitness certificates at NATS centres operational in Delhi, Mumbai, Pune, Chennai and Bengaluru. The fitness certificate regime under the Motor Vehicles Act, 1988 (Section 56) provides the legal basis: no valid fitness certificate means the vehicle cannot legally operate on public roads.

The “next 12 months” argument is specifically about incentive availability. The GST concession and registration fee waiver are not permanent features — they were introduced as time-bound promotional measures to seed the RVSF ecosystem and drive early adoption. Fleet operators who wait until their vehicles are compulsorily impounded or fail fitness tests will have no negotiating position on scrap value and will likely find the policy concessions have been either wound down or significantly diluted. Those who scrap proactively between now and March 2027 are operating in the most favourable incentive window the scheme has yet offered.

There is also a fleet renewal economics argument. A 12-year-old commercial vehicle typically consumes 15–20% more fuel than its equivalent modern replacement, carries higher maintenance costs (often ₹2–3 lakh annually for older heavy goods vehicles), and attracts higher third-party insurance premiums. The aggregate cost of running an ageing vehicle past its economic life, when set against the combined scrap value and incentive savings on replacement, frequently makes the case for early scrapping even without regulatory pressure.

The 7-Step Compliance Checklist for Fleet Operators This Quarter

Fleet managers and compliance officers should work through the following actions before the end of the current financial quarter. This list is designed for transport companies, logistics operators and government vehicle pool managers — not individual vehicle owners.

1. Audit your fleet age profile on the Vahan portal. Pull the registration date for every vehicle in your fleet. Identify all vehicles that will cross 15 years (for personal/light vehicles) or that have already failed or are at risk of failing automated fitness testing (for commercial vehicles). The Vahan portal’s mParivahan interface allows bulk queries against your fleet’s registered PAN or TAN.
2. Cross-reference against the RVSF registered list. Identify the nearest RVSF to each of your operational depots. Confirm registration status (provisional vs. final) and the RVSF’s capacity to process your vehicle categories — some RVSFs are licensed only for two-wheelers and light motor vehicles, not heavy commercial vehicles.
3. Obtain written scrap value quotes from at least two RVSFs before committing. Scrap value varies by vehicle age, condition, ferrous content and prevailing MS/aluminium rates. Document these quotes for your finance team’s capital budgeting process.
4. Verify that the RVSF holds valid CPCB authorisation under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 for handling waste oil, batteries and automotive fluids. Request a copy of their authorisation certificate. Using an unauthorised scrapper may void your CoD and create downstream liability.
5. Confirm the CoD format and registration fee waiver procedure with your State’s Regional Transport Office before vehicle deposit. Some states require pre-intimation or a declaration form before the CoD can be used as a concession instrument for new vehicle registration.
6. Align scrapping timelines with new vehicle procurement cycles. The GST concession and registration waiver are linked to the CoD’s validity period (typically 6 months from issue). If your new vehicle delivery is delayed beyond the CoD’s validity, you may lose the concession. Coordinate with your OEM dealer on delivery timelines before depositing the old vehicle.
7. Retain all documentation for at least 5 years — CoD, CoVS, RVSF invoice, GST invoices for the scrap transaction, and any state-level tax concession documentation. In the event of a GST audit or a State transport department query, these documents are your primary defence.

Incentive Summary Table: What You Get and When

Incentive Type	Applicable To	Quantum / Rate	Trigger Document	Status (Early 2026)
Motor Vehicle Tax Waiver	New vehicle purchase (all categories)	Up to 25% of applicable MV tax	Certificate of Deposit (CoD)	Active; varies by state implementation
Registration Fee Waiver	New vehicle registration	Up to 5% of ex-showroom price	CoD issued by RVSF	Active in ~22 states as of 2025
GST Concession	New vehicle purchase by individual/fleet	25% reduction on applicable GST	CoD + dealer declaration	GST Council recommended; OEM dealer-dependent
Scrap Value Payment	Vehicle owner at time of deposit	₹55,000–₹90,000 (heavy CV); ₹10,000–₹25,000 (LMV)	RVSF weight-based assessment	Market-rate; Q1 2026 MS at ₹32–₹38/kg
OEM Dealer Discount	New vehicle purchase at OEM dealership	₹10,000–₹50,000 (OEM-discretionary)	CoD or CoVS	Varies by OEM; Tata, Ashok Leyland active
Mandatory Scrapping (Govt Vehicles)	Central & State Govt fleets >15 years	Fitness/registration denial if not scrapped	MoRTH Notification / Vahan flag	Enforced from April 2025

Related Articles

• Battery Waste Management Rules 2022: EPR Targets, Deadlines and Fines for FY 2026 — relevant because ELV scrapping generates significant lead-acid battery waste subject to separate EPR obligations.
• BRSR Core: Why SEBI’s New ESG Mandate Will Force a Rethink of Your Scrap Disposal — fleet scrapping documentation feeds directly into BRSR material consumption and waste disclosures.
• Plastic Waste Management Rules 2024 Amendment: What Changed and Who Needs to Worry — vehicle interiors contain significant plastic components; understanding the amended rules helps fleet operators plan compliant disposal of seat materials and dashboards.

Frequently Asked Questions

What is a Certificate of Deposit and how do I use it for a GST concession?

A Certificate of Deposit (CoD) is issued by a Registered Vehicle Scrapping Facility (RVSF) at the point you hand over your vehicle for scrapping. It records the vehicle’s registration number, date of deposit, and the RVSF’s registration credentials. Under the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021, presenting this CoD to an OEM dealer or Regional Transport Office makes you eligible for a 25% GST concession (GST Council recommendation) and up to 5% registration fee waiver on the replacement vehicle. The CoD is typically valid for 6 months from the date of issue.

Are all vehicles over 15 years old required to be scrapped immediately?

Not all categories follow the same timeline. Under MoRTH’s framework, Central and State Government vehicles older than 15 years face mandatory scrapping with enforcement active from April 2025. Commercial transport vehicles are subject to the automated fitness testing regime — vehicles failing NATS tests cannot renew fitness certificates and are effectively grounded. Private passenger vehicles over 20 years old face re-registration restrictions with steeply increased fees. The age triggers and enforcement mechanisms differ, but the direction is uniformly towards scrapping ageing vehicles rather than extending their operational life.

How do I verify that an RVSF is genuinely registered with MoRTH?

The authoritative source is the Vahan portal maintained by MoRTH. Every RVSF receives a unique registration number upon provisional or final registration under the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021. You should ask any prospective RVSF for their registration number and cross-check it on the Vahan portal’s RVSF directory. Additionally, check whether the facility holds CPCB authorisation under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 for handling automotive hazardous waste — this is a separate but equally important credential.

What happens to the battery and fluids from a scrapped vehicle?

Under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, lead-acid batteries from ELVs must be channelled to a CPCB-authorised battery recycler. Used engine oil, coolant and brake fluid are classified as hazardous waste and must be collected, stored and disposed of by the RVSF according to its CPCB authorisation conditions. Since 2022, the Battery Waste Management Rules, 2022 have additionally placed Extended Producer Responsibility (EPR) obligations on battery manufacturers — RVSFs typically have tie-ups with EPR-registered battery recyclers to ensure this compliance chain is maintained.

Can a corporate fleet operator claim scrapping costs as a business expense?

The scrapping transaction itself — the transfer of the vehicle to an RVSF — generates a GST-compliant tax invoice for the scrap value received, which is income, not an expense. However, the accelerated depreciation write-off of the old vehicle’s book value upon disposal is claimable as a business expense under the Income Tax Act, 1961 (Section 32, read with the applicable depreciation schedule for motor vehicles). Fleet operators should confirm the specific depreciation treatment with their chartered accountant, particularly where the vehicle has been partially depreciated over multiple years. Retain the RVSF’s CoVS as the disposal evidence for your tax records.

Work With The National Recycling Corporation

The National Recycling Corporation is a Mumbai-headquartered, pan-India scrap trading and recycling company with an operational presence across Maharashtra, Gujarat, Delhi-NCR, Karnataka and Tamil Nadu. For fleet operators working through the vehicle scrapping policy 2026 compliance window, we offer a structured end-of-life vehicle scrap service that connects your fleet directly to RVSF-registered and CPCB-authorised processing facilities — with full documentation support at every step.

Every transaction we facilitate comes with GST-compliant invoicing, a Certificate of Recycling or Certificate of Vehicle Scrapping (CoVS) for your records, and BRSR-grade disposal documentation covering waste category, quantity, and authorised channel — the level of detail your sustainability team needs for SEBI’s BRSR Core disclosures and your own ESG audit trail. Pricing is indexed to prevailing MS and non-ferrous metal market rates, so you receive fair-market value without needing to negotiate blind.

Whether you are a state government department clearing a 50-vehicle backlog, a logistics company rationalising a commercial fleet ahead of the automated fitness testing rollout, or an auto dealer aggregating scrap from trade-ins, we have the network and the compliance infrastructure to handle it at scale. Contact us to schedule a fleet assessment, or explore our metal scrap recycling services and full scrap buying portfolio for related disposal needs.

• Pan-India fleet pickup co-ordination with RVSF and CPCB-authorised partners
• GST-compliant scrap purchase invoicing (HSN 7204 for ferrous scrap; HSN 7602 for aluminium)
• Certificate of Vehicle Scrapping (CoVS) and Certificate of Deposit (CoD) documentation support
• BRSR-grade waste disposal records for ESG reporting and SEBI compliance
• Fair-market pricing indexed to prevailing MS scrap and London Metal Exchange (LME) rates for non-ferrous metals
• Hazardous waste (battery, oil, automotive fluids) disposal through CPCB-authorised channels under the Hazardous and Other Wastes Rules, 2016

Sources and References

• Ministry of Road Transport and Highways (MoRTH) — Vehicle Scrapping Policy and RVSF Rules
• Vahan Portal, MoRTH — RVSF Registered Facility List and Vehicle Registration Data
• Central Pollution Control Board (CPCB) — Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016
• NITI Aayog — Circular Economy and End-of-Life Vehicle Policy Working Papers
• GST Council / GSTN Portal — HSN Codes and GST Concession Notifications for Vehicle Scrapping
• Ministry of Steel, Government of India — Scrap-Based Steelmaking Policy and ELV Feedstock
• London Metal Exchange (LME) — Non-Ferrous Metal Benchmark Prices (Aluminium, Copper)
• MSTC Ltd — Government Scrap Auctions and ELV Disposal Tenders