Indian car buyers are in for a festive treat this year. Pre-Diwali, the government declared a new GST regime that lowers tax on various segments of cars. With the new changes, most top models will be cheaper. For middle-class families looking to purchase their first car or SUV enthusiasts targeting an upper end vehicle, the new policy offers avenues of huge savings.
How Much Tax Was Used Previously
Until the present time, the tax regime on automobiles was pretty complex. Small petrol vehicles up to 1200cc engine and four metres in length had 28 percent GST and 1 percent cess. Small diesel vehicles had 28 percent GST and 3 percent cess, representing an overall tax of about 31 percent. Larger SUVs and MPVs were hit the most with 28 percent GST and 22 percent cess, taking the effective tax rate to 50 percent.
What Would Change Under GST 2.0
With GST 2.0, the government has made it easier. The majority of small and mid-range cars fall under the 18 percent slab now. These include petrol vehicles up to 1200cc and diesel vehicles up to 1500cc with a length of less than four metres. Even big SUVs and luxury cars, which previously levied almost 50 percent tax, now fall under the 40 percent slab. This realignment ensures lesser prices in nearly every segment.
Small Cars Get More Affordable for Value Buyers
The largest beneficiaries are small cars that rule India’s market. Maruti Alto K10, which costs ₹4.23 lakh, now receives a relief of approximately ₹42,000. Hyundai Grand i10 customers can save up to ₹47,000. Cars such as Maruti S-Presso, WagonR and Tata Tiago also experience a reduction of between ₹43,000 and ₹55,000. These reductions bring new hope for value-conscious families and first-time buyers.
Hatchbacks and Sedans Experience Savings
Mid-segment vehicles also gain a lot. Maruti Swift, another favorite in India, gets cheaper by around ₹60,000. The Dzire sedan, which has been a favorite, comes down in price by up to ₹68,000. Maruti Baleno and Fronx experience reductions of ₹67,000 and ₹75,000 respectively. Premium hatchbacks and compact sedans are now more affordable for young professionals and city families with these savings.
SUVs Experience Substantial Price Drop Under New Tax
SUVs have been the mosttaxed segment in India. GST 2.0 gives relief here as well. Tata Nexon, another best-selling compact SUV, becomes almost ₹80,000 lighter. Larger cars such as Hyundai Creta, Mahindra Thar, Scorpio, and Toyota Innova Crysta also gain as their tax burden comes down from 50 percent to 40 percent. Though percentage relief is less compared to hatchbacks, the resultant higher base prices mean absolute savings come into lakhs.
Also Read: Top 5 Electric Scooters in India with Best Range – With 212Km on Full Charge
Also Read:Most Powerful CNG Cars in 2025 Now Offer Up to 31Km Mileage
