Here’s some good news for budget-conscious vehicle buyers. The government has revised the GST slabswhich is expected to boost demand in the automobile sector during the festive season.
As per the update, small cars under 4 feet in height will get a 10% tax rebate. This move is aimed at making compact vehicles more affordable for the average Indian consumer.
Additionally, income up to Rs 12 lakh is now tax-free, and interest rates have also been reduced. Experts believe these steps will encourage spending, especially in the mid-range vehicle segment. To balance revenue, the government has increased taxes on luxury vehicles.
Cars with engines under 1500 cc (diesel or diesel hybrid), and petrol, petrol hybrid, CNG, or LPG cars under 1200 cc will now have an 18% tax hike. However, despite the hike, the final price of popular models like Tata Altroz, Maruti Suzuki, Hyundai i10, i20, and Renault Kwid is expected to come down due to adjustments in overall pricing.
Buyers of vehicles priced between Rs 6–10 lakh could save between Rs 60,000 to Rs 1 lakh, depending on how manufacturers handle the new GST structure.
For two-wheelers, GST on widely used bikes like Bajaj Pulsar and Hero Splendor has dropped from 28% to 18%. However, high-end bikes above 350 cc, such as Royal Enfield and KTM, will now attract 40% GST, along with an additional 3% cess.
SUVs also fall under the 40% GST slab, but with cess adjustments, buyers may still save 5–10% in total taxes. Models like Tata Harrier, Mahindra XUV 700, Hyundai Creta, and Maruti Grand Vitara are part of this segment.
Electric vehicles remain unchanged, continuing with just 5% GST, ensuring sustained affordability and encouraging green mobility.
Commercial vehicles like tractors and trucks will also see price drops, making them more accessible for farmers and transport operators.
The auto industry witnessed a dip in demand during 2025–26, with passenger vehicle sales falling by 1.4% and two-wheeler demand dropping by 6.2%. The revised GST slabs could reverse this trend, bringing relief to both manufacturers and price-sensitive consumers.
