New GST Rates for Large SUVs Beyond 4 Metres Revealed...
New GST Regulation Brings Mixed Fortunes for Vehicle Buyers
As the new Goods and Services Tax (GST) regime, GST 2.0, comes into effect from September 22, 2025, vehicle buyers in India can expect a mix of price adjustments. While larger vehicles like SUVs and Multi-Purpose Vehicles (MPVs) are expected to see a moderate increase in prices, smaller cars and motorcycles may witness a decrease.
Under the revised GST structure, mid-size and large cars, including popular models like the Hyundai Creta, Tata Harrier, Toyota Fortuner, and Mahindra XUV700, are now classified as 'luxury goods' and fall under the 40% GST slab. However, the removal of the cess has made these vehicles slightly more affordable than before. For instance, the on-road price for the Hyundai Creta is expected to decrease from ₹20.92 lakh to ₹20.20 lakh, and the Toyota Fortuner from ₹44.72 lakh to ₹43.18 lakh.
On the other hand, smaller cars such as the Hyundai Verna, Maruti Grand Vitara, Honda City, and Honda Elevate are expected to become more affordable. The on-road price for the Hyundai Verna is expected to decrease from ₹17.58 lakh to ₹16.97 lakh, and the Honda City from ₹16.65 lakh to ₹16.08 lakh.
The changes in GST 2.0 have also affected the pricing of motorcycles. While the GST for small cars and two-wheelers has been reduced, the GST on motorcycles above 350cc has been increased. This could potentially impact manufacturers like Royal Enfield and Bajaj Auto.
The new GST regime may also have an impact on the growth of luxury Electric Vehicles (EVs) in India, such as Tesla and BYD. With the overall incidence for most mid-size and large cars being lower under GST 2.0, it remains to be seen how this will affect the market for these high-end EVs.
In real terms, bigger vehicles should see slight relief in their on-road prices. For example, the on-road price for the Kia Seltos is expected to decrease from ₹20.56 lakh to ₹19.85 lakh, and the Tata Harrier from ₹26.69 lakh to ₹25.77 lakh. Similarly, the on-road price for the Toyota Innova Crysta is expected to decrease from ₹27.08 lakh to ₹26.15 lakh, and the Mahindra XUV700 from ₹25.14 lakh to ₹24.27 lakh. The on-road price for the Maruti Grand Vitara is expected to decrease from ₹20.68 lakh to ₹19.97 lakh, and the Tata Safari from ₹27.44 lakh to ₹26.49 lakh.
In the case of mid-size and larger cars with petrol engines between 1,200cc and 1,500cc, they are now taxed at a flat 40%. Similarly, mid-size and larger cars with diesel engines over 1,500cc are now taxed at a flat 40%.
In conclusion, the new GST regime brings a mix of changes for vehicle buyers in India. While larger vehicles are expected to see a moderate increase in prices, smaller cars and motorcycles may witness a decrease. The changes may also have an impact on the growth of luxury EVs in the country.
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