Auto Industry Welcomes New GST Slab Revisions Ahead Of Festive Season

The GST Council meeting held yesterday brought joy to first-time car buyers and carmakers alike. The Union Finance Minister, Nirmala Sitharaman, announced lowered tax slabs for small cars and motorcycles below 350 cc. They will now be taxed at 18 per cent, while they were earlier taxed at 28 per cent. The new GST slabs will be implemented from September 22 onwards, right ahead of the festive season sale.

Small Cars At 18%, Big Cars & SUVs At 40%

For the big cars or even luxury cars, the new GST slab has moved higher at 40 per cent, but the government has abolished the cess. Thereby, bringing down the total effective tax. While consumers are appreciating this move, carmakers are also celebrating this reform.

Last month, Maruti Suzuki reported a decline in the wholesale of small cars. Reports say that carmakers urged dealers not to lodge big inventory orders, citing an expected relief, which has now come into place. As for the country's largest carmaker - Hyundai, the sales remained largely stable with a minimal drop but an increase in exports.

SIAM: Automobile Industry Welcomes Decision To Reduce Tax

Mr. Shailesh Chandra, President, SIAM, said, “Automobile Industry welcomes the Government's decision to reduce the GST on vehicles to 18% and 40%, from earlier rates of 28% to 31% and 43% to 50%, respectively, especially in this festive season. 

This timely move is set to bring renewed cheer to consumers and inject fresh momentum into the Indian Automotive sector. Making vehicles more affordable, particularly in the entry-level segment; these announcements will significantly benefit first-time buyers and middle-income families, enabling broader access to personal mobility."

Hyundai: 60% Of Our ICE Portfolio Now Taxed At 18%

Speaking on the updated GST slabs, Mr. Unsoo Kim, Managing Director, Hyundai Motor India, said, "We at Hyundai Motor India Limited (HMIL) welcome the landmark GST reforms announced by the Government of India. This revolutionary step will provide a strong impetus to the Indian economy, enhance buoyancy and further strengthen consumer confidence. By reducing the tax burden on essential goods, the Government has laid the foundation for inclusive growth and a robust, consumption-led economy."

He added, " The GST overhaul will directly benefit the automotive sector. The announced reforms align seamlessly with the Government's commitment to Viksit Bharat and the Make in India initiative, encouraging domestic manufacturing and boosting demand across both urban and rural markets. Notably, 60% of our ICE portfolio will now fall under the 18% slab rate, with the remainder at 40%."

Mercedes-Benz: Thankful For Keeping GST Unchanged For BEVs

The government has not changed the tax slab for electric vehicles, be it for small cars or larger luxury vehicles. Commenting on the same, Santosh Iyer, MD & CEO, Mercedes-Benz India, said, "Government listened to the automotive industry's long-standing wish list of rationalising GST rates. This GST revision is the step in right direction, is progressive and will induce the much-needed impetus by boosting consumption and bring momentum to the automotive industry which essentially remains the pulse of the Indian economy. We are thankful to the Government for keeping the GST rate for BEVs unchanged, ensuring faster transition to a decarbonized future."

Tata Motors: This Reform Prioritises Easy Of Living And Business

On the same note, Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles & Tata Passenger Electric Mobility, iterated, "These reforms reflect Prime Minister Narendra Modi's vision for next-generation GST that prioritizes both ease of living and ease of doing business. The streamlined GST framework goes beyond rate rationalization with structural reforms enhancing long-term confidence in India's economic environment."

He added, "The GST Council's decision to retain the 5% GST rate on electric vehicles is a forward-looking move that reinforces India's commitment to sustainable, zero-emission mobility and signals long term policy stability. The reduction of GST on small cars to 18% further expands access to personal mobility, making it more affordable for a broader section of society. Together, these measures will not only accelerate EV adoption but also drive innovation, strengthen domestic manufacturing, and propel India toward a cleaner, smarter, and self-reliant mobility future."

Two-Wheelers Below 350cc At 18%

Talking of two-wheelers, motorcycles that use an engine smaller than or of 350cc will now be taxed at 18 per cent, in comparison to the 28 per cent GST slab they fell in earlier. This makes the affordable, entry-level motorcycles enjoy a slight benefit, making it a joyous moment for the middle-class buyers.

Hero MotoCorp: This Move Empowers Common Citizens

Admiring the move, Pawan Munjal, Executive Chairman, Hero MotoCorp, said, "We commend the government's timely and forward-looking decision to reduce GST on two-wheelers. This progressive step will serve as a crucial enabler, offering much-needed relief to first-time buyers-particularly in rural and semi-urban areas-where two-wheelers remain the backbone of personal mobility. It will significantly enhance accessibility and affordability for millions of Indians. The two-wheeler industry is not only a key driver of mobility but also a vital pillar of the national economy, contributing substantially to government revenues and generating employment across its value chain. By stimulating growth in this sector, the government has reaffirmed its commitment to empowering the common citizen while strengthening the foundation for long-term competitiveness under the "Make in India" vision."