The GST Council has revamped vehicle tax rates, making commuter rides more affordable while simplifying the tax structure for automakers and buyers alike. Effective September 22, small petrol cars (up to 1200 cc or diesel up to 1500 cc, under 4 m in length), motorcycles up to 350 cc, and three-wheelers now attract an 18% GST rate, down from 28%. Hybrid cars under these specifications are also included in this reduced bracket.
In contrast, motorcycles above 350 cc and larger vehicles, petrol cars over 1200 cc, diesel over 1500 cc, and longer than 4 m, plus luxury cars, yachts, and personal aircraft, now fall under a simplified 40% GST slab. Previously, these vehicles faced an effective tax rate of around 50%, including cess, so this new rate eases some financial burden.
Commercial vehicles like buses, trucks, ambulances, and auto parts are uniformly taxed at 18%, reducing complexity in pricing and supply chains. Meanwhile, electric vehicles retain their preferential status with a continued GST rate of just 5%.
For consumers, this translates to significant savings, especially for entry-level cars, where the total cost could drop by up to ₹60,000 on a ₹6 lakh vehicle. As sales stagnate, the auto industry is expected to receive a welcome boost this festival season thanks to the GST cut.
