Impact of New GST Rates on Car Prices

The GST Council’s revised tax structure, effective from September 22, 2025, is set to reshape car affordability, especially during the festive Navratri season. The new regime reduces GST on small cars, making them significantly cheaper for middle-class buyers. Petrol, LPG, and CNG cars under 4 metres in length and up to 1200 cc engine capacity will now attract 18% GST, down from 28%. Diesel vehicles below 1500 cc also fall under the 18% slab.

On the other hand, larger four-wheelers with higher capacities face a hefty 40% GST. Meanwhile, electric vehicles continue to enjoy the lowest slab of 5%, a move consistent with the government’s long-term push for green mobility.

For buyers, the most immediate benefit is cost savings. Entry-level cars could now be cheaper by ₹60,000 to ₹1,00,000, depending on the model and variant.

Source: Times of India