News Brief
Big Cars And SUVs Likely To Become Cheaper Under New GST Regime Despite 40 Per Cent Tax: Report
Nirmala Sitharaman, Union Finance Minister who also heads the GST Council.
Luxury car and SUV buyers may see a price drop despite the Goods and Services Tax (GST) on big cars being fixed at 40 per cent, the NDTV reported.
Finance Minister Nirmala Sitharaman announced the new tax structure on Wednesday (3 September), which eliminates the earlier cess that pushed up prices.
The revised GST rates will come into force on 22 September, at the start of the festive season.
Previously, large internal combustion engine (ICE) cars attracted 28 per cent GST along with a cess of 17-22 per cent, taking the overall tax burden to around 45-50 per cent.
Under the new framework, such vehicles will attract a flat 40 per cent GST with no additional cess, making models from automakers like Mercedes-Benz, BMW, and Audi relatively more affordable.
Commercial vehicles, including buses, trucks, and ambulances, will now face a uniform 18 per cent GST, reduced from 28 per cent.
Auto parts, irrespective of classification, and three-wheelers will also fall under the 18 per cent bracket.
Welcoming the move, Santosh Iyer, MD and CEO of Mercedes-Benz India, told NDTV that the government had finally addressed the auto industry’s long-standing demand for rationalised GST rates.
He described the revision as progressive and a step in the right direction, one that would boost consumption and inject fresh momentum into the automotive sector, which he called the pulse of the Indian economy.
Iyer also appreciated the decision to retain the lower GST rate on battery electric vehicles (BEVs), saying it would support a faster shift towards a decarbonised future.
“We view the GST simplification as a phase in the right direction – one that helps industry growth and allows us to expand the market. It also improves transparency and aligns with India's economic vision,” Audi India head Balbir Singh Dhillon added was quoted as saying by NDTV.
The GST Council’s move is expected to stimulate demand in the auto sector, which has witnessed sluggish sales in recent quarters.
