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RTO Rules For Selling Of Cars As Scrap In India

The RTO has laid down rules for scrapping old vehicles in India. As per the norm, cars that are older than 15 years cannot be used. Though they can be transferred to a new state for re-registration, it is a hassle. Instead, one can scrap the car.
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In India, car scrapping is not an organised activity like the sale of used cars. Old cars have been contributing a lot to the pollution woes in Delhi NCR. Recently, there was a National Green Tribunal order that banned the use of cars that are older than 15 years in Delhi. The Regional Transport Offices (RTOs) have stopped re-registering these vehicles and checking their fitness. Until now, there has not been any uniform policy for old vehicles. The impact of the National Green Tribunal order may be detrimental to car owners, as they may not be aware of the formalities of dealing with an aged vehicle. When it becomes illegal to operate such a car on Indian roads, what could they possibly do with it?

Car owners have the option to sell or transfer their vehicles to a neighbouring state before their Registration Certificate (RC) expires. It is important that this is done before the expiry of the RC, as the RTO will not renew the RC after the car completes 15 years. When a car is transferred to another state, it will have to be re-registered at the new RTO, and this registration has to be updated in the records of the old RTO. Otherwise, there is always a risk of the car being used for illegal activities. Car scrapping is an option in front of a car owner who is not keen on transferring the vehicle to another state.

Car Scrapping - What You Should Know:

To avoid the complexity of transferring a car to another state, the car owner can scrap the vehicle. Scrapping an old vehicle is one of the safest options available. This ensures that the car is chopped into pieces and recycled. The chances of it being used for unauthorised activities are completely eliminated as well.

Some points to note about the scrapping process are as follows:

  • When the car is scrapped, its chassis number is taken out before the scrap is sent for recycling.
  • The car owner is expected to approach an authorised scrap dealer for car scrapping. The dealer should be able to ensure that the vehicle is disposed off in a safe manner without any adverse impact on the environment.
  • The car owner should also approach the RTO and inform them about the scrapping of the vehicle. There is an option to deregister the car as well.
  • The scrap dealer will perform a physical inspection of the car and quote a price for scrapping based on the weight of the vehicle. Once an agreement is reached, the scrap dealer will remove the car parts and segregate them into rubber, plastic, iron, etc.
  • The car owner can negotiate on the price he/she gets for different car parts, such as battery, tyres, etc. This largely depends on the condition of these parts as well. If the car has a CNG unit fitted, then this can also be dealt with separately.
  • One of the precautions you should take is to check whether the car has actually been scrapped by the scrap dealer. There could be instance wherein the scrap dealer does not really scrap the vehicle, and then it may change hands and be used for illegal activities. This could invite trouble for the original car owner, as the registration of the vehicle is in his/her name.
  • It is not necessary to submit the original RC to the scrap dealer. You should only furnish the photocopy of the RC.
  • You can take some photos of the scrapped car as evidence for further procedures at the RTO.

Valuation Of Old Cars:

  • If the car is not in working condition you are likely to get the rate per kilogram of the metal parts. The current rate is an average of Rs.15 per kg for metal parts.
  • If the car is in good working condition, the scrap dealer will sell the spare parts of the vehicle. Only the metallic body of the car will be scrapped. The scrap dealer is likely to get a good profit on the sale of the spare parts, so the car owner can request for a higher lump sum amount at the time of scrapping.

RTO Rules For Scrapping And Deregistration Of Vehicles:

  • The car owner will first have to write a letter to the authorised RTO about the car scrapping.
  • He/she will have to surrender the original RC of the car along with the chassis number that was cut out from the vehicle at the time of scrapping. This will be kept at the RTO as part of the historical records.
  • The scrap dealer’s confirmation on a letterhead with complete address is also required. The pictures of the scrap can be submitted at this time.
  • The vehicle owner should also submit an affidavit with the application for scrap and de-registration. The affidavit will mention that the car is not under any loan, insurance claims, or pending court cases. The affidavit will also confirm that the vehicle is not involved in thefts.

The RTO will verify the documents submitted and proceed with the next steps after it receives diligence reports from the traffic police and National Crime Records Bureau (NCRB). Verification is also done for the records maintained at the RTO office regarding sale or purchase of the car. If all records are found to be satisfactory, the car will be deregistered by the RTO.

The Society of Indian Automobile Manufacturers (SIAM) has made suggestions to the government to provide incentives to car owners who decide to scrap their 15-year old vehicles. The government in the US has a scheme that offers tax benefits and other incentives for such car owners. SIAM recommends that such a policy is implemented in our country so that owners would be encouraged to come forward for car scrapping.

What Happens To The Registration Number Of The Scrapped Car?

  • When the RTO completes its car scrapping formalities, the registration number of the vehicle is free for use by someone else. Hence, it is possible for a new car to get the registration number of an old car that has been scrapped.
  • The insurance company should also be informed about the car scrapping.

When the car is taken to a scrap dealer, you will have to show your identity proof, ownership proof, and residence proof. The car owner will receive a challan/certificate from the scrap dealer in return. This is a mandatory step enforced legally to avoid stolen vehicles from being taken for scrapping.

Policy To Scrap Old Commercial Vehicles Receives CoS Nod:

In February 2017, the Committee of Secretaries (CoS) provided approval to offer a bouquet of benefits to commercial vehicle owners when they take their vehicles for scrapping. This move aims to remove old vehicles from the roads, as these are the major cause for pollution. The policy is applicable only to commercial vehicles that are more than 15 years old. The proposal will require clearance from the Union Cabinet before it is implemented in the country.

The policy proposed that the owners of vehicles scrapped will be liable to receive the following incentives:

  • Half the excise duty and road tax for a replacement vehicle
  • Discounts from auto manufacturers
  • Fair value for the scrapped vehicle

These discounts are expected to bring down the cost of purchase of a new vehicle by about 15%. At the recycling centre the vehicle owner will be provided a certificate that will have to be submitted at the dealership for availing the incentives.

The ministry claims that this policy will be able to reduce emissions from vehicles by up to 25% and save a lot of fuel each year.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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