![Asla – Watan Sahi [Official MV] Latest Punjabi Song – K Million Music](https://i.ytimg.com/vi/sCuLojys0n4/maxresdefault.jpg "Asla – Watan Sahi [Official MV] Latest Punjabi Song – K Million Music")
Big news! The GST Council has decided to change how cars are taxed in India, starting September 22, 2025.
The new tax rates are meant to make things simpler. Fewer tax slabs for most products, and some new, higher taxes for luxury stuff.
IMAGE: From the Sub 4 metre SUV, Tata Punch, to the full blown Mahindra Scorpio N, all vehicles will get new on-road prices this month. All Photographs: Rajesh Karkera/Rediff
The GST Council on Wednesday approved two slabs of 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.
Accordingly, petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length, and diesel vehicles of up to 1,500 cc and 4,000 mm length, would move to the 18 per cent rate.
Earlier, these two categories attracted 28 per cent GST with compensation cess of 1 per cent, and 28 per cent GST with 3 per cent compensation cess.
All automobiles above 1,200 cc and longer than 4,000 mm and racing cars will attract 40 per cent GST.
EVs will continue to be charged at 5 per cent.
Let’s break this down in plain language, for car buyers.
Small Cars = Cheaper!
If you are looking at small cars (petrol engines up to 1200cc or diesel up to 1500cc, and less than 4 metres long), you’re in luck!
Tax drops to 18% (earlier it was 29%).
For Example: This is how it the Maruti Suzuki Wagon R LXI will fare:
Ex-showroom price: ₹5.79 lakh
Old tax (29%): ~₹1.68 lakh → Total cost: ~₹7.5 lakh
New tax (18%): ~₹1.04 lakh → Total cost: ~₹6.8 lakh
That’s a saving of around ₹60,000–70,000 on your purchase!
So, cars like Kia Syros, Tata Nexon, Maruti Brezza, Maruti Swift Desire, Toyota Glanza and Mahindra 3XO also get cheaper. The more premium the car in this segment, the cheaper it will get.
Mid-Size Sedans = Mixed Bag
Now let’s talk about the classic Honda City.
Engine: 1498cc (within small car range).
BUT length: 4583 mm (longer than 4000 mm).
Because of that extra length → it gets hit with 40% GST!
Still, since the Honda City V variant has an ex-showroom price under ₹12 lakh, buyers may still see some relief — just not as much as for a small hatchbacks.
Cars in this category — Maruti Suzuki Ciaz, Hyundai Verna, Volkswagen Virtus etc, will change marginally OR in the case of Maruti Suzuki Ciaz, it will get pricier.
SUVs & Big Cars = More Expensive
SUV lovers, brace yourself. Almost all SUVs in India are longer than 4000 mm, so they get 40% GST.
Example: Hyundai Creta (mid variant)
Ex-showroom: ₹19 lakh
Old on-road: ₹22.5 lakh
New GST (40%): ₹7.6 lakh in tax alone
New on-road: ~₹26.6 lakh+ (before insurance & registration)
Ouch! That means SUVs like Mahindra Scorpio N, Toyota Fortuner, and Hyundai Creta will all burn a bigger hole in your pocket.
So if you dream of going big, just know you’ll also pay big. Don’t think the government wants you to dream big!
EVs = Winners (for now)
All Electric Vehicles, even the big ones, keep their sweet 5% GST rate. That makes them the cheapest option tax-wise.
But hey, are EVs really as “green” as people say? That’s a whole different debate for another day.
The Bottom Line
Small cars & hatchbacks → Cheaper
Mid-size sedans → Somewhat cheaper
SUVs & large cars → Way more expensive
EVs Still low tax (5%)
So, if you just bought a big car, Good news: you saved money!
If you bought a small car… well, let’s just say the timing wasn’t the best.
While the exact new prices will be announced by each manufacturer soon, the tax rationalisation is a positive development for buyers who are looking at small cars and for those Uber taxi drivers who dream of owning the cars they drive.
For all enthusiastic drivers who are looking to own cars, this seems to be a downer.
But even then, the exact final price of a car is influenced by various factors beyond GST, including ex-showroom price, transportation charges, dealer margins, and state-specific road taxes and registration fees.
The price changes mentioned by us are an approximation based on the change in the total tax incidence. Hopefully, the manufacturers will try their best to get this down.
