The government has heeded the longstanding demand of India’s automotive industry for a GST rate cut on cars to boost the adoption of personal mobility in the country. Although India is the third-largest car market in the world, adoption remains low, at just 32–34 cars per 1,000 people.
In its 56th meeting, the GST Council reduced the tax on small cars to 18% from the earlier 28%. Larger cars, including SUVs, now fall under the 40% tax slab without any additional cess, effectively reducing the final tax incidence. Electric cars will continue to attract 5% GST, while all auto components-regardless of the vehicle type they are used in-are taxed at 18%.
The GST Council has defined a small car as one under four meters in length, with petrol/CNG/LPG engines below 1,200 cc and diesel engines below 1,500 cc. Cars that are longer or have larger engines will attract 40% GST.
#WATCH | Delhi: After the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman says, "Mid-size and large cars, motorcycles of engine capacity exceeding 350 cc, aircrafts- helicopters and aeroplanes for personal use, yachts and other vessels for pleasure or sports,… pic.twitter.com/4iH7mo7O7k
---Advertisement---— ANI (@ANI) September 3, 2025
Here are the updated GST rates on cars, from entry-level to the most luxurious in the mass-market segment.
| Brand | 5% GST | 18% GST | 40% GST |
| Maruti Suzuki | eVitara | Alto K10, S-Presso, Celerio, WagonR, Swift, DZire, Eeco, Ignis, Baleno, Fronx | Brezza, Ertiga, Victoris, Grand Vitara, Jimny XL6, Invicto |
| Mahindra | Xuv400, BE6, XEV9E | XUV3XO | Bolero, Scorpio Classic, Scorpio N, XUV 7OO, Thar, Thar Roxx |
| Hyundai | Creta EV, Ioniq 5 | Grand i10, Exter, Aura, i20, Venue | Verna, Creta, Alcaraz, Tucson |
| Tata Motors | Tiago EV, Tigor EV, Nexon EV, Punch EV, Curvv EV, Harrier EV | Tiago, Tigor, Punch, Altroz, Nexon | Curvv, Harrier, Safari |
| KIA India | Carens Clavis EV, EV6, EV9 | Syros, Sonet | Seltos, Carens, Carens Clavis, Carnival |
| Toyota India | – | Glanza, Taisor | Rumion, Innova Crysta, HyCross, Fortuner, Hyryder |
| JSW MG Motor | Comet, Windsor, ZS EV, M9, Cyberster | – | Astor, Hector, Gloster |
| Honda Cars India | – | Amaze | City, Elevate, City Hybrid |
| Renault/ Nissan | – | Kwid, Triber, Kiger, Magnite | X-Trail |
| Skoda/VW | – | Kylaq | Kushaq, Slavia, Kodiaq, Taigun, Virtus, Tiguan, Golf GTI |
A concern for buyers seeking a vehicle with a slightly larger 1500cc engine will be the higher 40% GST. While these engines are considered a luxury by the government, in hilly areas, such engines often come in handy. Similarly is the case is with two-wheelers, where bikes with a 350 cc engine capacity will fall under a higher tax slab.
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