Planning to buy a car? Know about new GST to get more benefits

Now that festivals like Navratri and Diwali are near, and GST has been reduced, it will be interesting to see whether sales in the small car and two-wheeler segment increase again or not.

New Delhi: The GST Council on Wednesday approved a new tax structure for the automobile sector. Under this, the tax rate on big cars has been increased to 40 percent, while the tax on small cars and motorcycles up to 350cc has been reduced from 28 percent to 18 percent. Tax on electric vehicles will remain 5 percent as before.

Relief On Small Cars But Big Cars Expensive

Now petrol, CNG and LPG cars with engines up to 1200cc and diesel cars with engines up to 1500cc, whose length is less than 4000 mm, will attract only 18 percent GST. Earlier, these were taxed at 28 percent. At the same time, 40 percent GST will now be applicable on petrol / CNG cars above 1200cc, diesel cars above 1500cc and cars longer than 4000 mm. This includes big sedans, premium SUVs and imported cars.

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Understand Savings With An Example

Suppose you want to buy a car worth Rs 15 lakh with an engine up to 1200cc. Earlier the price was Rs 15,00,000 with 28 percent GST. On calculating the base price, it comes to around Rs 11,71,875. Now according to the new 18 percent GST rate, the price will be: 11,71,875 × 1.18 = Rs 13,82,812 approximately. That is, your savings will be around Rs 1.17 lakh.

Decline In SUV Sales For First Time

This change has come at a time when the SUV segment in India's passenger vehicle market registered a decline for the first time in five years. In June, monthly sales of SUVs fell by 2.1 percent to about 1.75 lakh units. While in 2015 the market share of this segment was only 14.3 percent, now it has reached almost 55 percent.

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Strategy And Expectations Of Car Companies

Companies like Maruti Suzuki and Mahindra & Mahindra are planning to increase sales with new models and marketing strategies. Mahindra has targeted 15-19 percent growth in the mid-to-high segment in FY26 and is preparing to launch several new electric and petrol-diesel SUVs.

New Hope From Festivals

Now that festivals like Navratri and Diwali are near, and GST has been reduced, it will be interesting to see whether sales in the small car and two-wheeler segment increase again or not.