Cart 0
SUV & Sedan Prices Set for Major Drop as India Plans GST Cut to 40%: Full Details & Expected Savings
SUV & Sedan Prices Set for Major Drop as India Plans GST Cut to 40%: Full Details & Expected Savings
India’s automotive sector is gearing up for a major price revolution as the government considers reducing Goods and Services Tax (GST) rates on passenger vehicles. This overhaul is expected to bring down prices of SUVs, sedans, and small cars—making premium vehicles more affordable for IndiCar buyers.
GST Reform: What’s Changing?
-
Current GST Structure:
-
Most cars taxed at 28% GST, plus a variable cess (up to 22%), raising the effective tax rate on larger vehicles to as much as 50%.
-
-
Proposed Changes:
-
Small cars (below 1200cc for petrol, 1500cc for diesel, and below 4m in length): GST rate could drop from 28% to 18%.
-
Larger cars, SUVs, and luxury vehicles: Expected to move to a flat 40% tax bracket (instead of a combined GST and cess that could total nearly 50%).
-
Impact: How Much Could Prices Drop?
| Segment | Current Tax | Proposed Tax | Expected Price Cut (%) | Example Model | Current Price (approx.) | New Price (estimate) |
|---|---|---|---|---|---|---|
| Entry-Level Hatch | 28% | 18% | 8–12% | Maruti Wagon R, Tiago | ₹6.3 lakh | ₹5.7 lakh |
| Small Sedans | 28% | 18% | 8–10% | Dzire, Aura | ₹7–8 lakh | ₹6.4–7.2 lakh |
| Compact SUVs | ~43%–50% | 40% | 3–5% | Brezza, Nexon, Creta | ₹10–15 lakh | ₹9.7–14.5 lakh |
| Mid/Large SUVs | ~50% | 40% | 3–5% | XUV700, Safari, Fortuner | ₹20–50 lakh | ₹19.5–48.5 lakh |
| Premium Sedans | ~50% | 40% | 3–5% | Honda City, Camry | ₹12–44 lakh | ₹11.5–42 lakh |
Top Carmakers & Models to Benefit
-
Maruti Suzuki, Hyundai, Tata Motors: Big winners, especially for small car and entry-level sedan buyers.
-
Popular Models: Alto, Wagon R, Swift, Tiago, Dzire, Aura, Baleno, i20, Brezza, Venue, Nexon, Seltos, Creta, XUV700, Harrier, Safari.
Why Is GST Being Rationalised?
-
Boost affordability: Make new cars accessible to more buyers.
-
Revive demand: Entry-level car sales have slowed thanks to rising costs.
-
Support auto industry: Helping clear unsold inventories as buyers defer purchases waiting for the cut.
-
Simplify taxes: Two-rate system (18% for most goods, 40% for luxury vehicles).
What Does This Mean for You?
-
Buyers: Lower ex-showroom prices, reduced EMIs, and more affordable upgrades!
-
Automakers: Higher sales forecast during festive season, better inventory cycles.
-
Banks/Finance: More attractive car loan deals possible.
Example: Before and After GST Cut
| Model | Current On-Road Price | Estimated New Price | Your Savings |
|---|---|---|---|
| Maruti WagonR LXi | ₹6.30 lakh | ₹5.72 lakh | ₹58,000 |
| Tata Tiago XE | ₹5.56 lakh | ₹5.04 lakh | ₹52,000 |
| Hyundai Creta S | ₹12.50 lakh | ₹12.15 lakh | ₹35,000 |
