Autobayng News Team
Industry leaders also welcomed the government’s decision to retain the 5 per cent GST on EVs, saying it would sustain momentum in the shift towards sustainable mobility.“>
The Indian automobile industry on Thursday welcomed the GST Council’s decision to reduce tax rates on vehicles, calling it a timely reform that will make cars and two-wheelers more affordable, particularly for first-time buyers and middle-income families.The Council on Wednesday rationalised the tax structure into three slabs — 5 per cent, 18 per cent and 40 per cent — effective September 22, the first day of Navaratri. Under the new regime, small petrol and CNG cars up to 1,200 cc and less than four metres in length, as well as diesel cars up to 1,500 cc and four metres long, will attract 18 per cent GST. Motorcycles up to 350 cc have also moved to the 18 per cent bracket. Larger vehicles, luxury cars, and motorcycles above 350 cc will fall under the 40 per cent slab, while electric vehicles will continue to be taxed at 5 per cent.
Industry’s reaction
The Society of Indian Automobile Manufacturers’ (SIAM) President Shailesh Chandra said the move would “bring renewed cheer to consumers and inject fresh momentum into the automotive sector.” He added that the reduction “significantly benefits first-time buyers and middle-income families, enabling broader access to personal mobility.”Federation of Automobile Dealers’ Associations (FADA) President C S Vigneshwar described the reforms as “bold and progressive,” noting that the simplification of slabs would improve affordability and strengthen India’s mobility ecosystem. However, he urged clarity on the treatment of compensation cess balances held by dealers to ensure a smooth transition.Shradha Suri Marwah, President, ACMA, said, “This decisive step will curb the grey market, encourage the use of quality compliant components, ease compliance, and support MSMEs – thereby strengthening the global competitiveness and resilience of India’s $80.2 billion auto component industry.”By reducing the tax burden on essential goods, the Government has laid the foundation for inclusive growth and a robust, consumption-led economy, believes Unsoo Kim Managing Director Hyundai Motor India. “The announced reforms align seamlessly with the Government’s commitment to Viksit Bharat and the Make in India initiative, encouraging domestic manufacturing and boosting demand across both urban and rural markets. HMIL remains committed to supporting the Government of India’s vision and contributing meaningfully to the nation’s journey toward becoming a global manufacturing powerhouse.”Industry leaders also welcomed the government’s decision to retain the 5 per cent GST on EVs, saying it would sustain momentum in the shift towards sustainable mobility.
With the festive season approaching, automakers and dealers expect the rate cuts to provide a significant boost to consumer sentiment and showroom footfalls.
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