The latest tax revision has reshaped how cars and two-wheelers are priced in India. The new GST structure will be applicable from September 22, 2025. For most segments, the cess has been removed and merged into the GST rate. The GST impact on vehicles varies across small cars, large cars, SUVs, two-wheelers, and electric models.
GST Impact on Vehicles: Segment-Wise Changes
| Vehicle Segment | Earlier GST + Cess | New GST Rate | Price Trend |
|---|---|---|---|
| Small Cars (≤4m, Petrol/LPG/CNG ≤1200cc; Diesel ≤1500cc) | 28% + 1–3% cess | 18% | Cheaper |
| Mid-Size & Large Cars (>1500cc or length >4m) | 28% + 17–22% cess | 40% | Slightly cheaper |
| Utility Vehicles / SUVs (>1500cc, >4m, ≥170mm clearance) | 28% + 22% cess | 40% | Cheaper |
| Two-Wheelers ≤350cc | 28% | 18% | Cheaper |
| Two-Wheelers >350cc | 28% + 3% cess | 40% | Costlier |
| Three-Wheelers | 28% | 18% | Cheaper |
| Electric Vehicles (2W/3W/4W) | 5% | 5% | No change |
GST Impact on Vehicles: Benefits for Mass Buyers
Small cars and commuter two-wheelers now fall under the 18% GST bracket. This shift will make hatchbacks, compact sedans, scooters, and entry motorcycles more affordable. The move benefits first-time buyers and families looking for budget mobility.
Impact of GST on Vehicles: Relief for SUVs and Larger Cars
Earlier, SUVs and bigger cars carried one of the heaviest tax burdens due to a high cess. The new 40% GST rate is expected to reduce the overall cost of ownership. While these models remain premium purchases, the price cut makes them more appealing to buyers in this segment.
Impact of GST on Vehicles: Winners and Losers in Two-Wheelers
For motorcycles and scooters under 350cc, the rate cut to 18% is a clear win. This helps the large commuter market. On the other hand, big bikes above 350cc now face a steep 40% GST rate, making them costlier than before. Enthusiasts planning superbikes will need to adjust their budgets.
EVs Stay Steady
Electric vehicles continue at 5% GST. While there is no further reduction, the low rate itself remains a strong push for green mobility. This ensures EVs stay the most tax-friendly option on the road.
Conclusion: What the GST Change Means for You
The GST impact on vehicles is clear:
- Affordable cars and bikes get cheaper at 18%.
- Bigger cars and SUVs reduce slightly with the 40% flat rate.
- EVs remain attractive with their unchanged 5%.
- Higher taxes hit superbikes.
For buyers, this is a turning point. Especially, the timing of your purchase matters, as only vehicles billed after September 22, 2025 will reflect the new GST rates.
