The most fun-to-drive SUVs in your budget are the 1.5-litre Volkswagen Taigun and Skoda Kushaq twins, which are very engaging thanks to their brilliant dynamics and a powerful, punchy engine. 

Both are due for a facelift, and the upgraded Kushaq is just around the corner and scheduled to launch on January 20th 2026. The Volkswagen Taigun facelift will come a month later. Both these SUVs will see some significant enhancements to the air conditioning and interiors. 

Top-end variants will come with rear massage seats, a first in the segment. However, one weakness is the rear seat space, which is relatively narrow and best for four. 

Therefore, if this is a deal-breaker for you, you could consider the Tata Sierra. It is fantastically spacious, has superb ride and handling and an all-new 1.5 petrol engine, which is smooth, punchy and fairly efficient too. 

The Sierra is not as engaging to drive as the Kushaq and Taigun, as it is heavier and has a relaxed power delivery. We would rule out the MG Hector in your case as it is too big, it's not a very engaging car to drive, and as you said, it guzzles fuel.
 

The Tata Sierra is an excellent option for you, keeping your big boot space requirements in mind. The Sierra boasts a boot up to 622 litres (up to the roof), which should serve your needs well. 

Moreover, it is a spacious car, and the Sierra Pure 1.5 Petrol MT variant that'll fit within your budget gets the basics like a touchscreen, electric mirror adjustment, keyless entry, rear AC vents, etc. 

Another option that you can consider for its expansive boot space is the MG Hector. 

Given your requirement for good rear seat comfort, you could consider the MG Hector. It is a spacious SUV and scores well on rear seat comfort. However, fuel economy on the petrol version is poor. 
Other options worth looking at include the Mahindra XUV700, Tata Harrier, Hyundai Creta and Kia Seltos.