From Maruti Suzuki Alto to Mahindra Thar: New GST rates on all cars in India

Subscribe

The government has come through on a longstanding demand of India’s automotive industry, that of a GST rate cut on cars to increase adoption of personal mobility in the country. After all, while India is the third-largest car market in the world, adoption is abysmally low at 32-34 cars per 1,000 people.

File photo of Maruti Suzuki cars inside a showroom.(HT)

That should change now.

The 56th GST Council has reduced the tax on small cars to 18% from 28% earlier. Bigger cars, including SUVs are in a new 40% slab—without any additional cess, that reduces the final tax incidence. Electric cars will continue to attract 5% GST. All auto components—irrespective of the vehicle type they go into—are also rated at 18%.

“This decision (GST rate cut on cars) will not only make vehicles more affordable, but also simplify the classification disputes that have long been a source of ambiguity for the industry,” Saurabh Agarwal, partner and automotive tax leader at EY, said in a note. “The removal of cess will provide crucial support to a sector that is a vital engine of economic growth.”

The GST Council has defined the small car as less than four metres with petrol/CNG/LPG engines less than 1,200 cc and diesel engines less than 1,500 cc. Any car that’s longer and larger will attract 40% GST.

Against that backdrop, here are the new GST rates on cars, from entry-level to the most luxurious in the mass market segment.

“This timely move is set to bring renewed cheer to consumers and inject fresh momentum into the Indian automotive sector,” Shailesh Chandra, president of the Society of Indian Automobile Manufacturers.

“Making vehicles more affordable, particularly in the entry-level segment, these announcements will significantly benefit first-time buyers and middle-income families, enabling broader access to personal mobility.”

See Less