Understanding the Certificate of Deposit: What You Get from Scrapping Your Vehicle

Understanding the Certificate of Deposit: What You Get from Scrapping Your Vehicle

Since the latter part of 2019, the Indian automotive industry has been in a difficult phase. The situation worsened with the subsequent COVID-19 pandemic. It is said that the scrappage policy benefits India’s struggling auto industry. There will be a need for new cars as the older models are phased out. The ecosystem will also gain from the disposal of inappropriate automobiles. The government wants old cars to be scrapped so that the new ones could be introduced in the market which is why authorised vehicle scrapping facility in India is introduced in different cities. We will discuss certification of deposit and benefits you will get from vehicle scrapping in this article.

What is a certificate of deposit?

After a vehicle is scrapped at an Authorized Vehicle Scrapping Facility (AVSF), the owner of the vehicle receives a Certificate of Deposit (CD). It acts as evidence that the car has been disposed of and that ownership has changed hands. The CD can be used to claim several benefits, including: 

  • New car discount: The owner may be eligible for a 4–6% reduction in the price of the new car (ex-showroom) if the vehicle is scrapped.
  • No registration costs: When the CD is shown, the new car’s registration costs are waived.
  • Road tax exemption: The new car may qualify for a road tax exemption from the state. For non-transport vehicles, the discount can reach 25%, while for transport vehicles, it can reach 15%.
  • Extra benefits from the car’s manufacturer: Car manufacturers have been asked to provide a 5% discount when buying a new car with a certificate of deposit. This discount is in addition to the amount you get for your car’s scrap value.
  • Waiver of outstanding loans: The owner of the car can be eligible for a waiver of any outstanding debts.

In order to receive rewards under India’s vehicle scrapping program, the Certificate of Deposit is a necessary document. Together with a certificate of vehicle scrapping (CVS), it can be created via the Vahaan portal.

Owning old vehicles will cost you a lot

It is anticipated that the total cost of renewing an outdated vehicle plus the required Fitness Test at the time of re-registration will discourage car owners from keeping their vehicle. In contrast, it appears to be possible to part ways by scrapping the car. Furthermore, it is anticipated that some prices will increase in the future. In light of inflation, such fee increases may occur on a periodic basis.

Since the government of India wants the introduction of new and fresh cars in the market which are good not only in their looks but have environment-friendly engines as well, they are discouraging the use of old vehicles through scrappage policy that will be beneficial for both environment and the vehicle owners.

RTO rules for deregistration and scrapping of old vehicles

  • Notify the appropriate RTO that the old car is being scrapped.
  • When the car is being scrapped, turn in the registration certificate and the chassis number plate that was taken off.
  • Send in the confirmation document that the car scrap merchant sent you.
  • Include an affidavit with your application to have the car deregistered.
  • The car must not be subject to a debt, insurance claims, or any legal proceedings, according to the document.
  • After confirming these documents, the RTO will request diligence reports from the National Crime Records Bureau and the traffic police.
  • Regarding the vehicle sale, the RTO will confirm the vehicle records kept in its database.
  • The RTO will proceed with the previous vehicle’s registration if the documentation is deemed acceptable.

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