What’s the Latest Update?
The GST Council (government’s tax committee) has decided to decrease the tax on cars. Earlier, the rates were higher, but now they have been fixed at 18% and 40%. This means cars will become cheaper, and persons will find it easier to buy them.
Why Was This Change Made?
The festive period is coming, and during this time, many people like to buy new cars. That’s why the government wants more people to purchase vehicles.
This will benefit middle-class families and first-time buyers.
The automobile industry (companies that make and sell cars) will also get a increase.
New GST Rate for Small Cars (18%)
Now the tax on all small cars has been reduced from 28% to 18%.
A small car means:
- Petrol, LPG, or CNG cars with engine capacity up to 1200 cc and length up to 4000 mm.
- Diesel cars with engine capacity up to 1500 cc and length up to 4000 mm.
Cars in this category include:
- Maruti Alto
- Tata Nexon
- Maruti Brezza
- Hyundai Venue
- Kia Sonet
- Baleno
- Skoda Kushaq
- Mahindra XUV 300
- Maruti Fronx
All these cars are under 4 meters in length, and now they will attract only 18% GST.
New GST Rate for Big Cars and SUVs (40%)
Big cars and SUVs will now be charged 40% GST.
A big car means:
- Engine capacity above 1500 cc
- Length above 4000 mm
- Ground clearance of 170 mm or more
Cars in this category include:
- Hyundai Creta
- Maruti Grand Vitara
- Mahindra Scorpio
- Mahindra XUV700
- Tata Harrier
- Tata Safari
- Mahindra Thar
New GST Rate for Three Wheelers
Even three wheelers like auto-rickshaws will now attract less tax.
- Earlier, the tax was 28%.
- Now, it has been reduced to 18%.
What Does the Industry Say?
Car dealers and producers have welcomed this decision. They said:
- It will make cars more reasonable for people.
- The tax system will become simpler across India.
- They faith the government will also adjust taxes on unsold stock.
The President of the Federation of Automobile Dealers’ Association (FADA) called this a “bold and forward-looking step.”
What Are the New GST Slabs?
GST means Goods and Services Tax – a tax added to goods and services, which sellers then pay to the government.
The new GST slabs are:
- 0%
- 5%
- 18%
- 40% (only for luxury or expensive goods like large cars and SUVs)
End Result
With the decrease in GST, small cars and three-wheelers will become cheaper, while big and luxury cars will still have higher taxes. The government’s aim is simple – to make cars reasonable for mutual families while also helping the vehicle business grows.
