GST 2.0 reforms effective September 22, 2025, slash tax rates on small cars and bikes, making them up to 12% cheaper. Learn how Maruti, Tata, Hyundai, and two-wheeler makers benefit and what this means for the auto industry.
The GST 2.0 changes announced in 2025 will certainly satisfy Indians who wish to purchase cars and bikes. As of Navaratri on September 22, 2025, the government will lower GST rates on small cars and motorcycles, making them up to 12% cheaper. This measure is intended to bring the auto sector back to life, especially during the holiday season when demand is at its highest.
What is new in GST 2.0?
- GST 2.0 makes the Goods and Services Tax (GST) structure easier to understand:
- Old System: 4–5 tax brackets, with autos and bikes generally paying 28–31% GST and cess.
- New System: There are only two slabs: 5% and 18%. There is also a 40% slab for luxury and sinful goods.
- Effect on Auto: The 18% slab now includes small vehicles and bikes, which lowers taxes overall.
How Much Cheaper Will Vehicles Get?
- Small cars (less than 1,200 cc and less than 4 m long):
- Before GST and cess: around 29–31%
- The new GST is 18%.
- Price Drop: Up to 12–13% (approximately ₹60,000–₹70,000 on a ₹5 lakh automobile)
Motorcycles (≤350 cc):
- Old GST: 28%
- 18% GST now
- Result: Commuter bikes and other two-wheelers become much cheaper.
SUVs and Bigger Cars:
- Changed from ~43–50% to 40% slab
- Effect on Price: A minor drop, not as big as tiny automobiles
Electric Vehicles (EVs):
- Keep the GST at 5% to promote clean transportation
Popular Models That Get Cheaper
- Maruti Swift: One of India’s bestsellers, now 10–12% off
- Hyundai Creta: A mid-range SUV that gets a GST break
- Mahindra Thar (entry-level models) —Young consumers can now afford it more easily.
- Hero Splendor and Bajaj Pulsar (≤350cc) are great news for middle-class families and people who drive to work.
Why This Change Is Important
- For Buyers: Cars and bikes are cheaper just in time for the holidays.
- The auto industry anticipates a significant surge in reservations and sales in the budget vehicle and commuter bike markets.
- For the Market: After the news, companies in the auto industry, such as Maruti, M&M, and Hero MotoCorp, went up by as much as 8%.
- For the economy, a simpler tax system makes it easier to follow the rules and encourages people to spend more.
Reactions from the industry
- Industry experts and leaders have praised the initiative, calling it a game-changer:
- Car companies foresee a big rise in first-time purchasers.
- Dealers think that sales would be at an all-time high during Navaratri–Diwali 2025.
- The stock market’s reaction suggests that investors are quite confident in the growth of the auto industry.
At a Glance: GST 2.0 Auto Impact
| Vehicle Type | Old GST (incl. cess) | New GST Rate | Price Impact |
|---|---|---|---|
| Small Cars (<1,200 cc) | 29–31% | 18% | ~12% cheaper |
| Bikes ≤350cc | 28% | 18% | Significant cut |
| SUVs & Big Cars | 43–50% | 40% | Slight reduction |
| EVs | 5% | 5% | No change |
FAQs
Q1: When will GST 2.0 go into effect?
Starting on September 22, 2025, the first day of Navaratri.
Q2: Which cars get the most out of it?
The biggest price drops are for small automobiles with engines under 1,200 cc and motorcycles with engines under 350 cc.
Q3: Will the price of luxury cars go down too?
Luxury cars go from 20% GST to 40% GST. This change is slight, but it is not as significant as the increase for smaller cars.
Q4: What about electric cars?
No change: EVs still have a 5% GST rate.
Conclusion
The GST revisions of 2025 are a big step toward making it possible for millions of people to move around easily. People who buy small cars and motorcycles get a timely holiday gift, while the auto industry gets a big boost. This change could lead to one of the largest sales booms ever in India’s auto industry as demand grows.
Final verdict: GST 2.0 is not merely a tax change; it’s good for consumers, manufacturers, and the economy as a whole.
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