Meta Description:
India’s New GST structure slashes rates for small cars and bikes, while revising slabs for SUVs and luxury vehicles. Effective from September 22, 2025.
Introduction
The Indian government has rolled out a major New GST reform for the automobile sector. Effective from September 22, 2025, the new tax slabs aim to simplify the structure, boost affordability, and support cleaner mobility solutions.
This update affects both cars and bikes, reducing taxes on smaller, budget-friendly models while increasing levies on bigger, premium vehicles like SUVs and superbikes.
What’s Changed?
The New GST Council has streamlined automobile tax rates as follows:
- 18% GST
➤ Small cars (Petrol ≤ 1,200cc / Diesel ≤ 1,500cc, under 4m)
➤ Bikes below 350cc - 40% GST
➤ SUVs, luxury cars
➤ Bikes above 350cc (e.g., RE 650, Harley X440) - 5% GST
➤ Electric Vehicles (EVs) – No change (EVs continue to benefit from the lowest GST rate)
This removes older overlapping slabs of 28%, 31%, and more — simplifying the overall structure to just three brackets.
Why It Matters
This reform is a game-changer for buyers, manufacturers, and the overall industry:
- Affordable mobility gets a push
- Tier 2/3 cities could see demand spikes
- Simplified GST = Easier for manufacturers to price better
- Encourages EV adoption
Who Benefits ?
✔ Middle-class buyers – Popular models like:
- Maruti Alto, Swift, WagonR
- Tata Punch, Hyundai Exter
- Bajaj Platina, Hero Splendor
- TVS Jupiter, Honda Activa
✔ Fleet operators – Uber/Ola cabs, last-mile delivery bikes
✔ EV users – Continue enjoying 5% GST with added subsidies
Who Pays More?
⛔ SUV and premium buyers:
- Toyota Fortuner, MG Gloster
- Mahindra Scorpio-N, XUV700
- Royal Enfield Interceptor 650
- Harley-Davidson X440, Triumph Speed 400
Even though the GST cap is 40% (earlier some were paying 45%+), these vehicles still sit in a premium pricing bracket, keeping the total cost high.
📌 Conclusion
The New GST overhaul for automobiles is a long-awaited move aimed at improving clarity and promoting affordable vehicles. Small car and bike buyers will rejoice, while luxury buyers may see marginal price increases.
As the festive season nears, this GST update could trigger a significant sales boost across mass-market segments — making 2025 a turning point in India’s auto tax landscape.
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