August 20, 2025

Hold on tight, car lovers! There’s buzz from HSBC that small cars in India could get way cheaper. How? If the government lowers the GST from a fat 28% to a lighter 18%, those little beauties’ prices might drop by nearly 8%. HSBC’s report spills the beans on the current tax drama: passenger vehicles now face a GST plus an extra cess, making the total tax a hefty 29% to 50%, depending on their size. The big news? The government might slice GST on small cars down to 18% and for larger cars, maybe a "special rate" of 40% without the cess. If this happens, big cars could become 3-5% cheaper too. As HSBC says, "This would mean for smaller cars prices may come down by 8 per cent and for bigger cars in the range of 3-5 per cent." Two-wheelers get a sweet boost too, with domestic brands likely to win more from a similar GST cut. But beware, this sweetness comes with a price for the government—tax collections could dip by around USD 4-5 billion. HSBC also talked about a less likely idea: chopping GST to 18% flat for all cars, keeping cess based on size. That would mean every car gets a 6-8% price cut, but the government stands to lose a bigger revenue chunk of about USD 5-6 billion. In short, if these spicy GST changes happen, small car buyers in India could hit the jackpot with cheaper wheels, while the government has to weigh its tax loss. Will the government rev up the engines for these cuts? Only time will tell!

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Tags: Gst reduction, Small cars price cut, Hsbc report, Indian car market, Tax change, Vehicle cess,