A recent GST reform has left prospective car buyers in a dilemma. Consumers who were planning to buy vehicles in the SUV category from Suzuki, Hyundai, Tata, or KIA may now grow reluctant and consider switching to EVs and hybrids.
If you’ve been unaware of the changes, here’s what happened.
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 burden. Electric cars will continue to attract a 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 a 40% GST. While the reduced GST on smaller cars is being welcomed, mid-size SUVs, which were driving sales for many brands, now face the same GST charges as luxury high-end vehicles such as Mercedes and BMW.
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 |
Maruti Suzuki recently launched the all-new Suzuki E-Vitara, and since the car will only be subject to a 5% GST, the new reforms could provide a significant boost to its initial sales. However, for other brands like KIA and Hyundai, whose major performers were mid-size SUVs, the new reforms could signal reduced sales. The final impact on vehicle prices will soon be clear after price revisions.
Following the GST announcement, several automobile companies, including Tata Motors, Mahindra, and Renault, will slash the prices to pass on the benefits to consumers. Maruti Suzuki, the largest car seller in India, is expected to reduce prices on models like the Alto by ₹40,000-50,000 and the Wagon R by ₹60,000-67,000, according to Chairman RC Bhargava.