GST Cut To 18%: Hatchbacks, Subcompact SUVs, Mass-Market Scooters And Bikes To Get Cheaper

Just In time for the festive season, automobile buyers have got a major relief when it comes to prices of new vehicles. After the Independence day announcement of rationalisation of GST rates by Prime Minister Narendra Modi, the Finance Ministry has announced new and simplified tax slabs for various goods, including passenger and commercial vehicles, as well as spare parts. This is likely to bring their costs down effective September 22nd, 2025.  

Bigger cars will now attract a flat 40% tax with zero cess.

Cars which are under 4 meters in length and run on 1200cc Petrol engines or 1500 cc Diesel engines or lesser will now attract at GST rate of 18% instead of earlier 28%. This means cars in all mass market segments like hatchbacks, subcompact sedans and subcompact SUVs will now become cheaper than earlier. Any other car will attract a flat tax of 40% and unlike earlier there will be no cess applicable on their purchase. EVs will continue to attract a rate of 5% irrespective of the segment they belong to.

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Bikes above 350cc will attract higher taxes than before.

Two-wheelers which run on 350cc engines or lesser will also now attract an 18% GST instead of earlier 28%. However motorcycles and scooters that run on bigger engines will now be taxed at 40% which will make them more expensive than earlier.  The Government has also reduced tax slabs on trucks, buses and ambulances from an earlier 28% to 18% while three-wheelers will also now be taxed at 18% down from 28%. Spare parts will be sold with 18% GST too, starting September 22nd.