The most recent reforms of GST are turning around to the automobile industry in India. Small cars, three-wheelers, and bikes (with a maximum power of 350cc) will pay 18% tax instead of 28%, starting September 22, 2025.
Luxury cars, SUVs and larger bikes will move to a new 40% slab - still less than the previous effective tax rate of about 50% including cess.
This will translate to an easier tax system and, above all, lower sticker prices in segments. To the consumers, it is a direct gift during the season of festivity. To the automakers, it is a badly needed boost to their stagnant sales.
Small Cars That Get Cheaper
One of the largest winners is entry-level hatchbacks, which remain the stalwart of Indian mobility.
Maruti Alto K10 & S-Presso: Prices for Alto K10 may fall from ₹4.23 lakh - ₹3.81 lakh, of S-Presso from ₹4.26 lakh - ₹3.83, making these budget-friendly hatchbacks even more attractive.
Maruti Swift & Dzire: Expect a cut of around ₹60,000, boosting their stronghold in the mass market.
Hyundai Grand i10: Likely to see a drop of nearly ₹50,000.
Tata Tiago: With safety credentials and a wide appeal, prices could reduce by ₹50,000.
Renault Kwid: Set for a reduction of about ₹40,000, strengthening competition in the entry-level segment.
SUVs and Bigger Cars: Moderate Relief
While SUVs shift to the 40% GST slab, the removal of cess makes them cheaper too.
Tata Nexon: Base variants may see a price cut of up to ₹80,000.
Hyundai Creta: Will now be 3% cheaper compared to the old regime.
Mahindra Thar, Scorpio & Toyota Innova Crysta: Previously taxed at nearly 50%, these popular models will now attract only 40% GST, leading to substantial price relief.
What This Means for Buyers
GST 2.0 is a shot in the arm to an industry that is struggling to deal with declining demand. First-time buyers will likely be lured back to cheaper small cars, and SUVs and lifestyle cars will be more available. The move has already been hailed by automakers such as Hyundai, as it will give consumers confidence and domestic manufacturing a boost.
It’s the right time to purchase a new car this holiday season.
Also Read: