The Indian government has slashed Goods and Services Tax (GST) on small cars from 28 percent to 18 percent, which will go into effect from September 22, 2025 (or the beginning of the festive season). Petrol/CNG/LPG cars under 4 metres in length and with engines not exceeding 1200cc will receive the price cut. Additionally, diesel cars of the same length and engine capacities not over 1500cc are also set to benefit from the GST reform. Notably, 1 percent and 3 percent cess on petrol and diesel cars, respectively, has now been removed entirely to create tax rationalisation.
- Currently, GST and cess are included in the ex-showroom price of a car
- Top spec Hyundai i20 N Line might recieve the highest price cut
- Maruti Alto K10, India's most affordable car, may start at Rs 3.76 lakh
This move will also provide a much-needed push to car sales, as several carmakers had reported a decline in volumes due to buyers withholding purchases in anticipation of reduced prices.
Estimated reduced prices of popular hatchbacks in India
Top-spec Maruti Swift, Baleno and Tata Altroz may see a price cut of about Rs 1.3 lakh
| Maruti Alto K10, Tata Tiago, Wagon R, Swift, Hyundai i20 GST cut price comparison | |||||
|---|---|---|---|---|---|
| Current price range (Rs, lakh) | Pre-reform GST rate | Reformed GST rate | Adjusted price range (Rs, lakh) | Difference (Rs) | |
| Alto K10 | 4.23-6.21 | 29 percent (28 percent GST + 1 percent cess) | 18 percent | 3.76-5.53 | 47,000-68,000 |
| Tiago | 5.00-8.55 | 29 percent (28 percent GST + 1 percent cess) | 18 percent | 4.45-7.61 | 55,000-94,000 |
| Wagon R | 5.79-7.62 | 29 percent (28 percent GST + 1 percent cess) | 18 percent | 5.15-6.78 | 64,000-84,000 |
| Swift | 6.49-9.65 | 29 percent (28 percent GST + 1 percent cess) | 18 percent | 5.78-8.59 | 71,000-1.06 lakh |
| i20 | 7.51-11.25 | 29 percent (28 percent GST + 1 percent cess) | 18 percent | 6.68-10.01 | 83,000-1.24 lakh |
| i20 N Line | 9.99-12.56 | 29 percent (28 percent GST + 1 percent cess) | 18 percent | 8.89-11.18 | 1.10 lakh-1.38 lakh |
The estimated revised prices reflect a 10 percent point reduction in GST (from 28 percent to 18 percent). An additional cess of 1 percent for petrol vehicles and 3 percent for diesel vehicles has been applied as well, resulting in an effective tax rate of 29 percent - 31 percent. Both GST and cess are applied to ex-showroom, Mumbai, prices. It remains to be seen how much of the price benefit is actually passed on to the car buyers.
Revised tax on larger cars
40 percent flat rate
Tax on big cars (over 4 metres in length) has been rejigged to a flat 40 percent GST. Previously, these models attaracted 28 percent GST and 17-22 percent cess (45-50 percent overall). 5 percent GST on electric vehciles is unchanged.
Also see:
Maruti, Tata, Hyundai, Mahindra August sales drop due to GST cut expectations