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The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, has proposed to slash GST rates on certain vehicles from 28% to 18%.
The GST cuts will make automobiles more accessible.(Representative Image)
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising ministers from all states, approved sweeping GST cuts on several commodities on Wednesday, bringing a much-needed relief for carmakers and buyers. This will be effective from September 22, 2025, the first day of Navratri.
GST rates on several automobiles have been slashed from 28% to 18%, making them significantly more affordable. The cuts mean that middle-class households will make big savings on small cars and bikes, providing a boost for Maruti Suzuki, India’s largest carmaker, and its rivals Hyundai and Tata Motors.
Arvind Shrivastava, Secretary, Department of Revenue, Ministry of Finance, announced that GST on Electric Vehicles (EV) will remain at 5%. However, SUVs and luxury EVs will see a higher GST of 40%, up from 28%. This is a higher slab for select few items.
The automobile industry had repeatedly urged the government to hasten the implementation of new GST rates, seeking their rollout before the start of the festive season in the second half of September.
ALSO READ: What Gets Cheaper, What Gets Costlier After GST Council’s Big Tax Reset: Full List
The major reform comes amid strained trade ties with the US over Donald Trump’s steep tariffs on Indian imports, with Prime Minister Narendra Modi making repeated calls for increased use of Indian products. The proposed tax cuts are aimed at curtailing the impact of the fall in exports to the US due to the recent tariff hike.
Hon’ble Prime Minister Shri @narendramodi announced the Next-Generation GST Reforms in his Independence Day address from the ramparts of Red Fort.Working on the same principle, the GST Council has approved significant reforms today.
These reforms have a multi-sectoral and… pic.twitter.com/NzvvVScKCF
— Nirmala Sitharaman Office (@nsitharamanoffc) September 3, 2025
Which Vehicles Will Get Cheaper? (From 28% to 18%)
- New pneumatic tyres, of rubber (other than of a kind used on/in bicycles, cycle-rickshaws and three wheeled powered cycle rickshaws; rear tractor tyres; and of a kind used on aircraft).
- Road tractors for semi-trailers of engine capacity more than 1800 cc.
- Motor vehicles for the transport of ten or more persons, including the driver (other than buses for use in public transport, which exclusively run on Bio-fuels)
- Petrol, Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm.
- Diesel driven motor vehicles of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm.
- Motor vehicles cleared as ambulances duly fitted with all the fitments, furniture and accessories necessary for an ambulance from the factory manufacturing such motor vehicles.
- Three wheeled vehicles.
- Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm.
- Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm.
- Motor vehicles for the transport of goods (other than refrigerated motor vehicles).
- Motorcycles of engine capacity (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars, of an engine capacity not exceeding 350cc, and side cars.
Additionally, the GST rates of certain parts and accessories – including chassis, wheel rims, bodies, and transmission – have been slashed.
Which Vehicles Will Get Costlier? (From 28% to 40%)
- Motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars (other than those mentioned in the 28% to 18% column).
- Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200 cc or of length exceeding 4000 mm.
- Motor vehicles with both compression-ignition internal combustion piston engine (diesel-or semi diesel) and electric motor as motors for propulsion, of engine capacity exceeding 1500 cc or of length exceeding 4000 mm.
- Motor cycles of engine capacity exceeding 350 cc.
- Aircraft for personal use.
- Yacht and other vessels for pleasure or sports.
Aveek Banerjee is a Senior Sub Editor at News18. Based in Noida with a Master’s in Global Studies, Aveek has more than three years of experience in digital media and news curation, specialising in international…Read More
Aveek Banerjee is a Senior Sub Editor at News18. Based in Noida with a Master’s in Global Studies, Aveek has more than three years of experience in digital media and news curation, specialising in international… Read More
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