GST 2.0 – Budget-Friendly Indian Cars Just Got Cheaper!
Soumi Roy 09-09-2025
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This is an exciting time for the Indian automotive industry. Starting September 22, 2025, GST 2.0 will come into effect.
CESS on cars will be a thing of the past, and the confusing tax slabs will be reformed to 18% on petrol cars with engines above 1200 CC and the same on diesel cars with engines above 1500 CC.
The same 18% GST applies to cars with a length limited to 4 meters. Vehicles surpassing these specifications will attract 40% flat GST. The implementation date for GST 2.0 is well timed, as the national festive season of India will be right around the corner!
So, whether you are planning to buy the best budget-friendly Indian cars or that luxury ride you have been eyeing for a while, this is indeed the best time to buy a car in India.
Entry-Level Car Makers Didn’t Waste Time!
Entry-level car makers in India chose to extend the monetary benefits of GST 2.0 to the customers before the norms are officially implemented.
The pioneering car makers that chose to reduce the prices of their vehicles in the aftermath of GST 2.0 are mentioned below –
- Hyundai reduced the prices of its entire passenger car portfolio by up to ₹2.4 lakhs.
- Tata Motors slashed the prices on its passenger car portfolio by a factor of up to ₹1.55 lakhs.
- Mahindra reduced the prices of its passenger car portfolio by a factor of ₹1.56 lakhs.
- Renault reduced prices of its passenger car portfolio by ₹ 96,395 thousand.
Other car makers are expected to follow suit despite no official statements from them, to be honest!
Mid-Range Cars and SUVs Now Entail Sweet Deals!
If you are planning to own a mid-range SUV or even dabble in the exclusive vehicles club, then you are in luck as –
- Toyota has slashed the prices of its most popular cars, like Hilux, Innova, and Fortuner, by ₹3.49 lakhs.
- Kia also decided to reduce the prices of its best-selling cars like the Seltos by ₹4.48 lakhs!
GST 2.0 Will Benefit the Used Car Market as well!
Yes, you read that right!
GST 2.0 will affect the used car market of India as well. The reason is simple. Used car prices are benchmarked against new car prices. Hence, when prices of new cars fall, used car prices will fall as well.
Furthermore, the price of a commodity goes up when supply is limited – that’s basic economics!
Hence, when new cars are easily accessible, used car sales will fall – supply will be high & demand will be low, hence, prices will go down so that used car dealers can empty their inventories.
In this context, make sure that if you are planning to buy a used car in India, you first go ahead and get a vehicle history report for the car you are interested in. A car history check is an essential part of the used car buying process. This allows one to ensure that the money they are spending on a used car is worth the effort, and they don’t end up buying a lemon!
The Indian Automobile Industry Will Witness A Domino Effect?
So, multiple car makers have already revised the sticker prices of their respective passenger vehicles. But that is not the end of the show. The picture is still emerging as multiple car makers with large market shares like Maruti Suzuki, are yet to come out with price revisions or at least official statements.
To sum it all up, one can expect the Indian car industry to go through a domino effect of GST 2.0 price revisions – leading to sustainable growth for the foreseeable future!
This Is The Right Time To Buy That Dream Car!
It is no news that the Indian automobile sector has been struggling for a while to convince Indians that they need to buy a car.
The high taxation, along with the inclusion of CESS on car purchases, used to drive up the on-road prices of vehicles. Now, with GST 2.0, coming into effect from September 22, 2025, Indian car makers have started to offer some level of financial respite to would-be car buyers.
In a nutshell, this is the right time to buy that dream car – a decision that you have been shunning for quite a while now!