Modi government

GST rates on cars and bikes may be slashed before Diwali New GST slabs: “Merit” and “Standard” under discussion Buyers, auto industry to benefit from tax relief Indian vehicle owners could be in for a festive surprise this Diwali. The central government is reportedly planning to reduce Goods and Services Tax (GST) rates on cars, SUVs, and two-wheelers. Prime Minister Narendra Modi, in his Independence Day speech, hinted at a new tax framework that would provide relief to buyers and boost the automotive sector. At present, small cars attract 28% GST along with 1–3% cess, while SUVs are taxed as high as 50% including cess. The government is now considering a new two-tier GST structure, classified as “Merit” and “Standard.” Under this system, essential or priority goods could attract as little as 5% GST, while standard products would continue under the 18% slab. Reports suggest that along with vehicles, items such as air conditioners and construction materials may also see reduced tax rates. The proposal includes removing the current definition-based classification for SUVs, which has long created confusion in taxation. If approved, the move will bring significant relief for middle-class buyers looking at small cars and entry-level bikes under ₹10 lakh. It could also make vehicle manufacturing and spare parts cheaper. However, electric vehicles are expected to continue at the existing 5% GST rate, while luxury cars may not see drastic changes. Experts believe that the reduction in GST would benefit not only buyers but also manufacturers, dealers, and the overall auto industry, giving a strong push to sales during the festive season. An official announcement is expected closer to Diwali, which could mark the start of a new GST regime in India.

Big GST Relief on Cars and Bikes Likely Before Diwali