Prospective car owners in India now have an innovative way to reduce the cost of a new vehicle purchase, even if they don't have an old car to scrap themselves. By acquiring a Certificate of Deposit (CoD) issued under the central vehicle scrappage framework, buyers can unlock substantial financial benefits.
What is a Vehicle Scrappage CoD?
A Certificate of Deposit (CoD) is a document issued by a Registered Vehicle Scrapping Facility (RVSF) to the owner of an eligible vehicle that has been officially scrapped. Crucially, these CoDs are transferable, meaning the original owner can sell them to another individual who then uses the certificate to claim benefits when purchasing a new vehicle.
Benefits for New Car Buyers
The central vehicle scrappage policy provides several incentives for new car purchases made with a valid CoD:
- Registration Fee Waiver: The buyer becomes eligible for a complete waiver on the registration fee for their new vehicle.
- Motor Vehicle Tax Concessions: Significant reductions in motor vehicle tax are available, potentially up to 25% for non-transport vehicles and 15% for transport vehicles, though exact percentages can vary by state regulations.
- Manufacturer Discounts: Many car manufacturers offer specific discounts to buyers presenting a CoD. In 2024, passenger vehicle manufacturers covering approximately 98% of the market agreed to discounts of up to 1.5% of the ex-showroom price or ₹20,000, whichever was lower. Some premium brands, like Mercedes-Benz, offered even higher benefits of ₹25,000.
The Growing CoD Market
This transferability has fostered a secondary market for CoDs. They are traded through formal platforms like DigiELV, which is integrated with the VAHAN system, as well as through informal dealer networks. As of September 2025, the average trade price for a CoD across all vehicle categories was around ₹10,634. NITI Aayog reported over 71,000 CoD trades on DigiELV by September 2025, with light motor vehicle CoDs averaging ₹10,814.
Does Buying a CoD Make Financial Sense?
Consider purchasing a new car priced at ₹10 lakh. If you buy a CoD for ₹10,000, and it grants you a ₹1,000 registration fee saving, a ₹20,000 motor vehicle tax saving, and a ₹15,000 manufacturer discount, your total benefits would sum up to ₹36,000. After deducting the ₹10,000 cost of the CoD, your net saving would be ₹26,000, demonstrating a clear financial advantage.
"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.
It's important to note that the actual benefits from a CoD can vary based on the specific state's rules, the type of vehicle being purchased, and the manufacturer's current offers. While tax concessions are not uniform across all states, the overall framework provides a compelling incentive for new car buyers to explore the vehicle scrappage CoD market.