GST reforms: Small cars, bikes up to 350 cc gets cheaper; more tax on luxury

New Delhi: Small cars and entry-level bikes are set to get cheaper as the GST Council on Wednesday approved a complete overhaul of the tangled Goods and Services Tax (GST) regime.

The GST Council approved limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.

Petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length would move to the 18 per cent rate from the current 28 per cent.

Motorcycles up to 350 cc would be taxed at a lower GST of 18 per cent against 28 per cent currently.

All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc and racing cars will be charged with a 40 per cent levy.

Small hybrid cars will also benefit, while EVs will continue to be charged at 5 per cent.

A look at the cars that will become cheaper:

​​Hatchbacks (all < 4,000 mm)

Maruti Suzuki Swift (≈3,860 mm). 

Maruti Suzuki Baleno / Toyota Glanza (≈3,990 mm). 

Tata Altroz (≈3,990 mm). 

Tata Tiago (≈3,767 mm). 

Hyundai Grand i10 Nios (≈3,815 mm). 

Maruti Suzuki Alto K10 / Celerio / WagonR / Ignis (≈3,530–3,700 mm). 

Citroën C3 (≈3,981 mm). 

Renault Kwid (≈3,731 mm). 

Compact sedans (under 4,000 mm)

Maruti Dzire (≈3,995 mm). 

Hyundai Aura (≈3,995 mm). 

Honda Amaze (≈3,995 mm). 

Tata Tigor / Tigor EV (≈3,993 mm). 

Micro/entry “SUV-ish” crossovers (still < 4,000 mm)

Tata Punch (≈3,827 mm). 

Hyundai Exter (≈3,815 mm). 

Sub-4m SUVs / crossovers

Hyundai Venue / Kia Sonet (≈3,995 mm). 

Maruti Brezza / Fronx / Toyota Urban Cruiser Taisor (≈3,995 mm). 

Nissan Magnite (≈3,994 mm) / Renault Kiger (≈3,991–3,990 mm). 

Tata Nexon (≈3,995 mm). 

Mahindra XUV 3XO (≈3,990–3,995 mm). 

Lifestyle/MPV & others (also < 4,000 mm)

Maruti Jimny (≈3,985 mm). 

Mahindra Thar (3-door, ≈3,985 mm). 

Mahindra Bolero Neo (≈3,995 mm). 

Renault Triber (≈3,990 mm). 

MG Comet EV (≈2,974 mm).

Cars that will become costlier:

Maruti Suzuki

Ciaz

Ertiga

XL6

Grand Vitara

Invicto

Hyundai

Verna

Creta

Alcazar

Tucson

Kona Electric

Ioniq 5

Kia

Seltos

Carens

EV6

Tata

Harrier

Safari

Mahindra

Scorpio-N

Scorpio Classic

XUV700

Bolero Neo Plus

Toyota

Urban Cruiser Hyryder

Innova Hycross

Fortuner

Hilux

Camry

Honda

City / City e:HEV

Elevate

Škoda

Kushaq

Slavia

Kodiaq

Volkswagen

Taigun

Virtus

Tiguan

MG (Morris Garages)

Astor

ZS EV

Hector / Hector Plus

Gloster

Citroën

C3 Aircross

Jeep

Compass

Meridian

Wrangler

Isuzu

D-Max V-Cross / Hi-Lander

MU-X

Force Motors

Gurkha (3-door and 5-door)

BYD

Dolphin

Atto 3

e6

Seal

Mercedes-Benz (incl. Maybach & EQ)

A-Class Limousine, C-Class, E-Class, S-Class, Maybach S-Class

GLA, GLB, GLC, GLE, GLS, G-Class

EQB, EQE SUV, EQS

BMW (incl. i range)

2 Series Gran Coupé, 3 Series, 5 Series, 7 Series

X1, X3, X5, X7

i4, i5, i7, iX1, iX

Audi (incl. e-tron range)

A4, A6, A8 L

Q3, Q5, Q7, Q8

e-tron GT, Q8 e-tron

Volvo

S60, S90

XC40, C40, XC60, XC90

Lexus

ES, LS

NX, RX, LX

LM

Jaguar Land Rover

Jaguar F-PACE

Range Rover Evoque, Discovery Sport

Defender 110 / 130

Range Rover Velar

Range Rover Sport

Range Rover

Discovery

Porsche

718 Cayman / 718 Boxster

911

Macan

Cayenne

Panamera

Taycan

MINI

Countryman

Maserati

MC20

Grecale

Levante

Bentley

Continental GT / GTC

Flying Spur

Bentayga

Rolls-Royce

Ghost

Cullinan

Phantom

Aston Martin

Vantage

DB12

DBX

Ferrari

Roma

296 GTB / GTS

SF90 Stradale / Spider

Purosangue

Lamborghini

Huracán

Revuelto

Urus

"Government listened to the automotive industry's long-standing wish list of rationalising GST rates," Mercedes-Benz India MD and CEO Santosh Iyer said in a statement.

This GST revision is the step in right direction, is progressive and will induce the much-needed impetus by boosting consumption and bring momentum to the automotive industry which essentially remains the pulse of the Indian economy, he added.

"We are thankful to the Government for keeping the GST rate for BEVs unchanged, ensuring faster transition to a decarbonised future, while reducing oil imports," Iyer said.

Presently, automobiles are taxed at 28 per cent, which is the highest GST slab.

A compensation cess, ranging from 1 to 22 per cent, is levied on top of this rate, depending on the type of vehicle.

The total tax incidence on cars, depending on engine, capacity and length, ranges from 29 per cent for small petrol cars to 50 per cent for SUVs.

Besides, GST on auto components has been reduced to 18 per cent from the current 28 per cent.

"ACMA welcomes the government's decision to bring all auto components under a uniform 18 per cent GST slab -- a long-standing recommendation of the industry," Automotive Component Manufacturers Association of India (ACMA) DG Vinnie Mehta said.

This landmark reform will help curb the grey market, ease compliance, support MSMEs, and enhance the global competitiveness and resilience of India's automotive component industry, he added.

The GST panel approved simplifying the GST from the current four slabs - 5, 12, 18 and 28 per cent, to a two-rate structure - 5 and 18 per cent.

A special 40 per cent slab is also proposed for a select few items.