No old car to scrap? Buying a scrappage certificate could still save money | Personal Finance

If you are planning to buy a new car in India and do not have an old vehicle to scrap, there is another way to access some of the benefits linked to vehicle scrappage: Buying a Certificate of Deposit (CoD) from someone who has already scrapped an eligible vehicle.

 

The certificate has acquired a monetary value because it can be transferred to another buyer and used to claim applicable benefits on a new vehicle.

 

This has created a small but growing secondary market for scrappage certificates. While some transactions happen through the formal DigiELV platform, buyers and sellers are also discussing such certificates through dealers, online forums and informal networks.

  

“If you are looking to buy a new car this year, the CoD gets you a 10-12 per cent discount on the car. The certificate of deposit is being sold in the black market for as much as Rs 20,000,” a car dealer told Business Standard on condition of anonymity.

 

Why are people buying these certificates?

Under the vehicle scrappage policy, a CoD issued by a registered vehicle scrapping facility (RVSF) can be used to access various benefits when purchasing a new vehicle.

 

These can include a waiver of registration fees, state-level motor vehicle tax concessions and discounts offered by automobile manufacturers, depending on the state, vehicle and manufacturer.

 

The government has also specifically recognised that CoDs can be traded.

 

The Ministry of Road Transport and Highways’ (MoRTH’s) annual report says a CoD can be traded and used to avail of financial benefits when purchasing a new vehicle.

 

That means someone who has scrapped an old car but is not planning to buy a new one immediately can potentially sell the certificate to somebody who is buying a vehicle.

 

Conversely, a person buying a new car but without an eligible old vehicle can purchase a CoD from an existing certificate holder.

 

How does the maths work?

You do not necessarily need to own an old car to access benefits linked to vehicle scrappage. But buying a CoD only makes sense if the savings on the new car exceed what you pay for the certificate.

 

Imagine you are buying a new car worth ₹10 lakh.

 

You do not own an old vehicle that can be scrapped. But the dealer tells you that you can buy a CoD from somebody who has already scrapped an eligible vehicle and use it to claim benefits on your new car.

 

You find a CoD being offered for ₹10,000.

 

Should you buy it?

 

The answer depends on how much the certificate will actually save you.

 

And this is where India’s emerging market for vehicle scrappage certificates gets interesting.

 

A CoD is issued when an eligible end-of-life vehicle is handed over to an RVSF. The certificate can then be used to claim benefits on the purchase of a new vehicle. The government has also made CoDs electronically tradable, meaning a person who has a certificate but does not need it can sell it to someone who does.

 

The formal trading platform is DigiELV, which is integrated with the VAHAN system. It allows certificate owners to put a certificate up for sale and buyers to make offers.

 

How would this work for a buyer?

Say Samarth has an old car.

 

He takes it to an RVSF, which processes the vehicle for scrapping and issues him a CoD. The CoD represents his eligibility for the applicable benefits when purchasing a new vehicle.

 

But Samarth does not want to buy a new car.

 

Jaideep, meanwhile, wants to buy a new car worth ₹10 lakh but does not own an old vehicle.

 

Samarth can potentially sell his CoD through DigiELV, and Jaideep can buy it if the certificate meets the requirements for the vehicle he is purchasing. DigiELV says anyone who owns a valid CoD can sell it before expiry, while buyers can acquire certificates through the trading system.

 

Now suppose Jaideep pays ₹10,000 for the certificate.

 

What does he get in return?

 

The central vehicle scrappage framework provides for three broad categories of benefits:

 

Waiver of the registration fee

 

Concession in motor vehicle tax, subject to the state government’s rules

 

Discount from the vehicle manufacturer, where offered

 

The central government provides for motor vehicle tax concessions of up to 25 per cent for non-transport vehicles and up to 15 per cent for transport vehicles, while registration fees are not levied when the new vehicle is registered against a CoD, subject to the applicable rules.

 

But there is an important catch: The actual benefit available to Jaideep depends on the state where he registers the new car and the applicable vehicle category and rules. DigiELV specifically says that CoD benefits vary by state.

 

How much could Jaideep save?

Suppose Jaideep is told by the dealer that his CoD qualifies him for:

 

Registration fee saving: ₹1,000

 

Motor vehicle tax saving: ₹20,000

 

Manufacturer discount: ₹15,000

 

His total benefit would be:

 

₹1,000 + ₹20,000 + ₹15,000 = ₹36,000

 

Jaideep paid ₹10,000 for the CoD.

 

So his net saving would be:

 

₹36,000 − ₹10,000 = ₹26,000

 

In this hypothetical example, buying the certificate makes financial sense because Jaideep pays ₹10,000 to unlock ₹36,000 in benefits.

 

How does the transaction work legally?

The formal mechanism is through DigiELV, which describes itself as the marketplace for buying and selling CoDs.

 

A certificate owner can list the CoD for sale, while a prospective buyer can bid for it. Once the transaction is completed, the certificate is transferred to the buyer’s account.

 

NITI Aayog’s report on India’s end-of-life vehicle ecosystem provides a snapshot of this market.

 

As of September 1, 2025, 71,196 CoD trades had been recorded across vehicle categories on DigiELV. The largest category was light motor vehicles/non-transport vehicles, with 69,390 trades and an average trade price of ₹10,814. Across all categories, the average trade price was ₹10,634.

 

That gives an indication of what certificates were actually changing hands for on the formal marketplace at that point.

 

NITI Aayog itself notes that the implementation of motor vehicle tax concessions is not uniform across states.

 

How much discount can a new-car buyer get?

This is where buyers need to be careful.

 

Under the central framework, a CoD can provide a registration fee waiver, while motor vehicle tax concessions can be as high as 25 per cent for non-transport vehicles and 15 per cent for transport vehicles, subject to state implementation.

 

There can also be an automobile manufacturer discount.

 

In 2024, several passenger vehicle manufacturers agreed to offer a discount of 1.5 per cent of the ex-showroom price or ₹20,000, whichever is lower, against an eligible scrapped vehicle. Mercedes-Benz offered a flat ₹25,000 discount.

 

MoRTH’s 2024–25 annual report records similar arrangements, saying participating passenger vehicle manufacturers covering about 98 per cent of the market agreed to discounts of up to 1.5 per cent or ₹20,000, while Mercedes-Benz offered ₹25,000.

 

So, on a ₹10 lakh car, a 1.5 per cent manufacturer discount would be ₹15,000.

 

If the buyer has paid ₹10,000 for a CoD, the manufacturer discount alone would not necessarily make the purchase worthwhile. But if the buyer also qualifies for a substantial road tax concession and registration fee waiver, the economics can change.

 

The catch: A CoD is not a coupon with a universally fixed value. Its value depends on where you register the vehicle and what you buy.