GST rates on cars in India September 2025

 Here’s the latest update on new GST rates on cars in India, based on the most recent information as of September 2025

Key Changes to GST on Cars (Effective from September 22, 2025)

• Small cars (Petrol ≤ 1,200 cc or Diesel ≤ 1,500 cc, up to 4 meters in length)
  GST reduced from ~28% (+ cess) to a flat 18%, with cess removed.
  
  

• Mid-size and large cars, SUVs, MPVs
  GST simplified to 40%, replacing the previous 28% plus a higher cess (typically 15–22%).
  
  

• Electric Vehicles (EVs)
  Retain a low GST rate of 5%, with no additional cess.
  
  

• Auto parts and accessories
  Now uniformly taxed at 18%, regardless of classification.
  
  

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Impact on Car Prices

• Budget small cars (e.g., Maruti Alto, Wagon R, Tata Tiago): buyers could save between ₹35,000 to ₹1.3 lakh.
  
  

• Compact SUVs and mid-size models: expect savings up to ₹1–1.3 lakh.
  
  

• Large SUVs/MPVs (e.g., Fortuner, Innova): substantial savings—up to ₹3.48 lakh.
  
  

• Luxury vehicles: although taxed at 40%, still see relief compared to the previous effective rate of ~48–50%.
  
  

Government and industry sources also indicate the tax benefits are being passed on to consumers, with carmakers ramping up production ahead of the festive season.

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Summary Table: GST Changes on Cars

Category	Old Tax (GST + Cess)	New Tax (from Sep 22, 2025)	Estimated Savings
Small Petrol/Diesel Cars	~29–31%	18%	₹35,000 – ₹1.3 Lakh
Mid-size / Compact SUVs	~43–50%	40%	Up to ₹1.3 Lakh
Large SUVs / MPVs	~50%	40%	Up to ₹3.48 Lakh
Luxury Cars	~45–50%	40%	5–10% savings
Electric Vehicles (EVs)	5%	5%	No change (already low)
Auto Parts & Accessories	Varies (~18–28%)	18%	Simplified rate

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🆕 TL;DR

• Small cars got a significant tax cut (18%, no cess).

• Big, luxury vehicles and SUVs now taxed at a simplified 40%.

• EVs remain incentivized with a 5% GST.

• Auto parts now at a unified 18% GST.

• Consumers are benefiting with notable price reductions—especially in the small car and luxury segments.