The Goods and Services Tax (GST) on new cars has been reduced, with the rate for small cars (petrol ≤ 1200cc or diesel ≤ 1500cc, length ≤ 4m) lowered from 28% to 18%. Larger cars and SUVs now have a uniform 40% tax, replacing the previous system of 28% GST plus a variable cess. This has led to significant price cuts across many new car models.
- Small Cars: 18% GST
- Applies to cars with petrol engines up to 1200cc or diesel engines up to 1500cc, and a length of no more than 4 meters.
- Bigger Cars and SUVs: 40% GST
- Applies to cars that exceed the small car criteria (e.g., larger engines or length greater than 4 meters).
- This replaces the previous 28% GST plus a variable compensation cess of up to 22%.
