Big Savings Ahead: How India's GST 2.0 Transforms Vehicle Prices

[Ritika]

Hey there, car lovers and future ride owners! I've got some awesome news coming out of the auto world that you won't want to miss. The Indian government just announced some significant GST changes that will kick in on September 22, 2025, and these changes are all about making it easier for you to snag a new car or bike. This comes after the 56th GST Council Meeting, and the aim is to make many vehicles more wallet-friendly by tweaking the tax rules.

Cars Are Going to Be Cheaper!

The new GST setup is a game changer since it simplifies things by eliminating the old 12% and 28% tax brackets. They’re rolling out new rates, where luxury items will be taxed at a 40% rate.
The best part? They’ve completely scrapped the extra compensation tax on vehicles — it’s now only applicable to tobacco products.

Small Petrol Cars (under 4 meters, up to 1200cc):

• The tax used to be 29% (28% GST + 1% cess).
• Now, it’s a flat GST rate of 18%.
• That means you'll save about 11%.
• You could save between ₹85,000 and ₹1 lakh on a ₹10 lakh car!

Small Diesel Cars (under 4 meters, up to 1500cc):

• These were taxed at 31% (28% GST + 3% cess).
• Now it's a solid 18% GST.
• You'll save 13% overall!

Larger & Luxury Vehicles:

• Hybrid cars, whether they’re mid-size, large, or luxury rides, are also getting easier to manage tax-wise.
• Rates used to range between 43% and 50%, depending on size.
• Now, there's a flat rate of 40%.
• This change means you’ll see some hefty savings — anywhere from ₹1.4 lakh on a Creta up to ₹35-40 lakh if you're eyeing a Lamborghini Urus.

And for those of you who care about the environment, good news! The GST rate for Electric Vehicles (EVs) remains the same at just 5%.

Two-Wheelers: A Mixed Bag

The changes are a bit different for two-wheelers:

• Bikes Under 350cc: The tax rate is dropping from 28% to 18%, so these will become cheaper!
• Bikes Above 350cc: On the flip side, larger bikes are facing a tax hike from 31% to 40%, which places them in the 'sin goods' category.

Your Path to a New Ride is Looking Good!

Starting September 22, 2025, these GST reforms will lower vehicle prices by removing that extra cess and streamlining tax brackets. Small cars will see the biggest price drops, and larger vehicles won’t be as expensive either. Just keep in mind that some larger motorcycles might cost a bit more. Overall, this is great news for car buyers and the auto industry, especially for the middle class, and it should encourage more people to purchase small cars. Manufacturers will be updating their prices for popular models soon. In short, these reforms are all about making it easier for you to acquire a new vehicle!