Big Boost For Auto Sector: GST On Small Cars Cut To 18%

he government has rolled out significant GST reforms in its 56th Council meeting, simplifying the tax structure to a two-slab system of 5% and 18%, with a special 40% slab for luxury and sin goods. Early Diwali bonuses and streamlined taxation aim to boost consumption and ease inflation pressures. Finance Minister Nirmala Sitharaman stated that the reforms prioritize the common man.

The automobile industry emerges as a key beneficiary under GST 2.0. Small petrol and diesel cars now attract 18% GST, down from 29% and 31% respectively. Mid-size cars see a cut from 45% to 40%, and SUVs/luxury vehicles drop from 48% to 40%. Two-wheelers under 350cc now attract just 18% GST, while larger bikes above 350cc see a hike to 40%. Electric vehicles remain at a flat 5%. The logistics sector - including trucks, buses, ambulances, and three-wheelers - also benefits from a reduced GST of 18% from the previous 28%.