September 5, 2025

Big news is hitting India's roads! The GST Council has cut tax rates on many kinds of automobiles, just in time for the festive season. This decision is set to spark fresh energy in the entire Indian automotive sector and will bring smiles to first-time buyers and middle-class families. Experts from the auto world are calling it a smart and timely move. Shailesh Chandra, President of the Society of India Automobile Manufacturers (SIAM), said, "The automobile industry welcomes the government's decision to reduce the GST on vehicles to 18 per cent and 40 per cent, especially in this festive season." He added, "This timely move is set to bring renewed cheer to consumers and inject fresh momentum into the Indian automotive sector." He explained that making vehicles more affordable, especially entry-level ones, will help more families get their own ride. Echoing this happiness, C S Vigneshwar, President of the Federation of Automobile Dealers' Associations (FADA), praised the "bold and progressive reforms". He said these changes simplify the tax structure and lower costs for popular types of vehicles. "This is a decisive step that will boost affordability, spur demand, and make India's mobility ecosystem stronger and more inclusive," he said. But he also asked for smooth and glitch-free implementation so the benefits reach buyers easily during the busy festive time. From the manufacturer side, Sudarshan Venu, Chairman of TVS Motor Company, called the GST cut a "major move by the government to further turbocharge growth." He said, "It will significantly boost consumption across segments of the society." Two-wheelers will become more affordable, helping people upgrade their rides or buy their first bike. Another good news is that electric vehicles (EVs) will continue to enjoy a low GST rate of 5 per cent. Chandra said this will "help sustain the ongoing momentum towards sustainable mobility." He also praised the fixing of classification and duty structure problems that will make doing business much easier for the industry. However, both Chandra and Vigneshwar pointed out one important thing: the government should quickly tell everyone how the compensation cess on unsold vehicles will be handled. Vigneshwar stressed, "One area that may need earliest clarification is about levy and treatment of cess balances currently lying in dealers' books, so that there is no ambiguity during transition." The GST Council’s update, effective from September 22 (first day of Navaratri), sets two main GST slabs: 5 per cent and 18 per cent. Petrol, LPG, and CNG vehicles under 1,200 cc and up to 4,000 mm in length, plus diesel vehicles up to 1,500 cc and 4,000 mm, now move to 18 per cent GST from earlier 28 per cent plus cess. Motorcycles up to 350 cc also drop from 28 per cent to 18 per cent. Larger vehicles over these limits, including big motorcycles and racing cars, will face a 40 per cent GST. Small hybrid cars benefit too, while EVs keep their low 5 per cent rate. This move is expected to make buying vehicles easier on wallets, speed up sales, and jazz up the auto market during the festive cheer. So get ready to zoom into the celebrations with a fresh deal on wheels!

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Tags: Gst cut, Automobile industry, Tax rates, Electric vehicles, Indian automotive sector, Festive season,