New GST Rates on Cars: What It Means for You
New GST Rates on Cars: What It Means for You
What’s Changed in GST for Cars?
Starting 22 September 2025, the GST Council simplified automobile taxes. Previously, cars were taxed using multiple slabs and variable cesses. Now:
- Small cars (under 4 metres in length, petrol/CNG/LPG up to 1,200 cc or diesel up to 1,500 cc) will have a flat 18% GST, down from 28% plus ces
- Larger cars, SUVs, and high-end models now attract 40% GST, with no extra cess, unlike before when total tax could reach 50%.
This makes tax calculation clearer and cars generally more affordable
How Much Will Prices Drop?
Different car manufacturers have already passed on these savings to customers:
- Mahindra: Price cuts range from ₹1.01 lakh to ₹1.56 lakh across popular models like the Scorpio-N, Thar, XUV3XO, and Bolero. Effective 6 September.
- Tata Motors: Discounts up to ₹1.55 lakh on cars like Tiago, Nexon, Altroz, Safari, and Punch. Effective 22 September
- Renault: Price reductions up to ₹96,395 on models like Kwid, Triber, and Kigers
- Hyundai: Cuts up to ₹2.4 lakh, including ₹60,640 on models like Verna and up to ₹2.4 lakh on the Tucson.
- Kia: Discounts from ₹48,000 to ₹4.49 lakh on models like Sonet, Syros, Seltos, Carens, and Carnival.
- Audi: Luxury segment sees big savings—between ₹2.6 lakh and ₹7.8 lakh on models ranging from A4 to Q
Analysts expect 12–12.5% price reduction on small cars, making them especially attractive for beginners and budget-conscious buyers
Why It’s Good for Indian Consumers
- Affordability: Reduced GST makes both small and large cars cheaper by tens of thousands—or even lakhs—of rupees.
- Festive Season Advantage: With major festivals like Navratri and Diwali coming up, people are more likely to buy now that prices are lowers
- Better for Used Cars and Financing: Lower ex-showroom prices also mean reduced road tax and easier financing, benefiting buyers across income levels.
- Boost for Auto Industry & Jobs: Lower prices can lead to higher demand, benefitting dealerships, manufacturers, service networks, and even gig workers like drivers and mechanics. This uptick also supports ancillary component industries.
At a Glance: What’s Happening
| Segment | Old Tax + Cess | New GST Rate | Approx. Price Reduction |
|---|---|---|---|
| Small cars (<4 m, ≤ 1.5L) | ~28% + cess | 18% | ₹60,000–1 lakh+ |
| Larger cars & SUVs | 43–50% (GST + cess) | 40%, no cess | Up to ₹2 lakh (SUVs/luxury segment) |
| Electric vehicles | ~5% | 5% (unchanged) | N/A |
The new GST rates make car ownership more accessible, especially for entry-level buyers. Luxury and SUV buyers also benefit from clean, predictable tax rates. With festive season around the corner, this is a golden time for car purchases. If you’re thinking about buying, this reform gives you even more reason to start planning a test drive—or to book soon.
Last Updated on: Monday, September 8, 2025 10:08 pm by The Statesman India Team | Published by: The Statesman India Team on Monday, September 8, 2025 10:08 pm | News Categories: News
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