From Thar to Creta: Popular models to see price cuts under new GST rates

The Goods and Services Tax (GST) Council’s decision to restructure

automobile taxation

is set to bring price relief for car buyers across India. From September 22, which coincides with the start of Navaratri, small and mid-sized cars will be taxed at 18 per cent instead of 28 per cent, while larger vehicles will be taxed at a flat 40 per cent. The move removes the compensation cess and simplifies the current multi-layered tax system.Current vs revised structureAt present, small petrol cars with engine capacity up to 1,200 cc and length under four metres attract 28 per cent GST plus 1 per cent cess. Small diesel cars up to 1,500 cc in the same length category face 28 per cent GST and 3 per cent cess. Larger SUVs, typically above 1,500 cc and longer than four metres, fall in the highest bracket, paying a combined 50 per cent in GST and cess.The revised system places most small and compact models in the 18 per cent slab, while mid-size and premium vehicles, including larger SUVs, move to a single 40 per cent rate. Electric vehicles remain taxed at 5 per cent, and hybrids have also seen a downward revision.

Impact on small carsIndustry analysts expect the biggest impact in the entry-level hatchback segment, which has slowed in recent years due to rising costs. Popular models like Maruti Suzuki Alto K10, Swift, Dzire, Hyundai Grand i10, Tata Tiago, Renault Kwid, and Maruti S-Presso are set to become more affordable. • The Alto K10 could see prices fall from Rs 4.23 lakh to about Rs 3.81 lakh. • The Tata Tiago is expected to start at Rs 5.15 lakh, down from Rs 5.65 lakh. • The Hyundai Grand i10, currently priced at Rs 5.98 lakh, may be reduced to around Rs 5.51 lakh. • The Renault Kwid could get a price cut of roughly Rs 40,000.Such reductions, ranging from Rs 40,000 to Rs 80,000 depending on the model, are expected to make small cars more attractive to first-time buyers and households upgrading from two-wheelers.

SUVs and mid-size vehiclesCompact SUVs such as Tata Nexon also benefit from the new 18 per cent slab. The base Nexon variant could see a reduction of nearly Rs 80,000, strengthening its position as one of the best-selling vehicles in the country.Larger vehicles will continue to face higher tax but at a lower incidence than before. The Hyundai Creta, Mahindra Thar, Mahindra Scorpio, and Toyota Innova Crysta previously attracted 43–50 per cent tax, combining GST and cess. With the flat 40 per cent slab, these models will see modest relief. For example, the Creta could become about 3 per cent cheaper, while the Thar, Scorpio, and Innova may see slightly larger cuts.Spurce: The Economic Times