India’s GST Council is moving to simplify and cut tax rates on cars and two-wheelers.

By Aniket Chakraborty Aug 22, 2025 Arrow BUSINESS

Currently, cars attract 28% GST plus up to 22% cess, making them heavily taxed items.

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Small petrol cars pay about 29%, while SUVs can be taxed up to 50%.

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EVs already enjoy just 5% GST, encouraging India’s green mobility drive.

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The new plan proposes only two slabs: 5% and 18%, scrapping 12% and 28%.

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All ICE cars and two-wheelers may shift from 28% down to 18% GST.

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Luxury cars may face a separate 40% slab with cess adjustments.

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Price cuts could be big: entry-level cars cheaper by ₹30,000+, bikes by ₹6,000+.

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Mass carmakers like Maruti, Hyundai, Tata, and two-wheeler giants Hero, Honda, TVS, Bajaj stand to gain.

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PM Modi called the reform a “double Diwali gift,” easing middle-class burdens and boosting auto demand.

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