Small vehicles and entry-level bikes are set to get cheaper as the GST Council on Wednesday (September 3, 2025) permitted an entire overhaul of the tangled Goods and Services Tax (GST) regime.
The GST Council permitted limiting slabs to 5% and 18% efficient from September 22, the primary day of Navaratri.
Petrol, LPG and CNG autos of lower than 1,200 cc and less than 4,000 mm size and diesel autos of up to 1,500 cc and 4,000 mm size would transfer to the 18% fee from the present 28%.
Motorcycles up to 350 cc can be taxed at a decrease GST of 18% in opposition to 28% at present.
GST Reforms 2.0: Council approves new charges; Here are the bulletins
The Government has decreased GST on a number of objects throughout completely different classes. GST decreasing fee shall be efficient from 22th of this month. Briefing the media in New Delhi, Finance Minister Nirmala Sitharaman mentioned that GST on widespread man and middle-class objects has been decreased from 18% or 12% to 5%.
The Finance Minister knowledgeable that objects such as hair oil, rest room cleaning soap, cleaning soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and different family articles will now have solely 5% GST. She additional mentioned that GST on ultra-high temperature milk, chena and paneer has been decreased to zero from 5%, whereas all Indian breads will now see a zero fee. Ms. Sitharaman additionally introduced that GST on meals objects such as namkeen, bhujia, sauces, pasta, immediate noodles, goodies, espresso, preserved meat, cornflakes, butter and ghee has been decreased from 12% or 18% to 5%.
| Video Credit:
The Hindu
All cars above 1,200 cc and longer than 4,000 mm as properly as bikes above 350 cc and racing vehicles shall be charged with a 40% levy.
Small hybrid vehicles may even profit, whereas EVs will proceed to be charged at 5%.
“Government listened to the automotive industry’s long-standing wish list of rationalising GST rates,” Mercedes-Benz India MD and CEO Santosh Iyer mentioned in a press release.
This GST revision is the step in proper course, is progressive and can induce the much-needed impetus by boosting consumption and produce momentum to the automotive business which basically stays the heartbeat of the Indian economic system, 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,” Mr. Iyer mentioned.
Presently, cars are taxed at 28%, which is the very best GST slab.
A compensation cess, starting from 1% to 22%, is levied on prime of this fee, relying on the kind of automobile.
The complete tax incidence on vehicles, relying on engine, capability and size, ranges from 29% for small petrol vehicles to 50% for SUVs.
Besides, GST on auto elements has been decreased to 18% from the present 28%.
“ACMA welcomes the government’s decision to bring all auto components under a uniform 18% GST slab — a long-standing recommendation of the industry,” Automotive Component Manufacturers Association of India (ACMA) DG Vinnie Mehta mentioned.
This landmark reform will assist curb the gray market, ease compliance, assist MSMEs, and improve the worldwide competitiveness and resilience of India’s automotive element business, he added.
“The move makes tractors and farm machinery more affordable for farmers, reduces costs for commercial vehicles and improves accessibility for personal mobility through rationalisation of rates across all SUVs. Together, these measures are expected to stimulate demand and drive inclusive growth across the entire ecosystem,” Rajesh Jejurikar, ED & CEO, Auto and Farm Sector, M&M, mentioned.
The continuation of the 5% GST fee on EVs is a vital enabler of India’s clear mobility imaginative and prescient. This measure will additional speed up the adoption of electrical autos and reinforce India’s management in sustainable, inexperienced transportation, Mr. Jejurikar mentioned.
The GST panel permitted simplifying the GST from the present 4 slabs of 5%, 12%, 18% and 28%, to a two-rate construction of 5% and 18%.
A particular 40% slab can also be proposed for a choose few objects.
