Mumbai: This festive season, small cars and two-wheelers could become cheaper. The central government is planning to reduce the Goods and Services Tax (GST) on cars and bikes from 28 percent to 18 percent.
If the GST cut happens, prices of cars and bikes may drop by around 10 percent. Because of this, many people are putting their purchase on hold and waiting till Diwali. Sales in the auto market have slowed down as buyers hope to save money once GST rates are reduced.
Why Sales Are Slowing Down Now
Data from August auto registrations shows:
Tractors: Sales up 32 percent
Two-wheelers & trucks: Sales up 6–7 percent
Passenger cars: Sales up only 1 percent
The weak growth in car sales suggests that people are waiting for the GST cut before buying. A report by global brokerage firm Jefferies also said that if GST is reduced, sales of two-wheelers and small cars will rise quickly.
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The GST Council is expected to meet on 3–4 September to finalise the new tax rates
- The 28 percent GST slab may be removed for small cars and bikes.
- EVs and tractors may be taxed at just 5 percent GST.
- Luxury cars will continue to attract about 40 percent tax, so no relief for premium buyers.
What Buyers Should Know
How much can you save? On a Rs 10 lakh car, you may save about Rs 1 lakh if GST is cut. For a Rs 1 lakh bike, savings could be around Rs 10,000.
Should you wait? If you plan to buy a new car or bike soon, waiting until Diwali could be smart. But if you need a vehicle immediately, consider that stocks and festive offers may also affect prices.
Impact on auto sector: Lower GST could boost demand, increase production, and bring more jobs in the auto industry.
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Vehicle Price (Ex-Showroom) Current Price (28% GST) Possible Price (18% GST) Approx. Savings
Rs 1,00,000 (bike/scooter) Rs 1,28,000 Rs 1,18,000 Rs Rs 10,000
Rs 5,00,000 (hatchback car) Rs 6,40,000 Rs 5,90,000 Rs 50,000
Rs 10,00,000 (sedan/SUV) Rs 12,80,000 Rs 11,80,000 Rs 1,00,000
Rs 15,00,000 (premium SUV) Rs 19,20,000 Rs 17,70,000 Rs 1,50,000
Value for Buyers
- Small car and two-wheeler buyers stand to benefit the most.
- Waiting until Diwali could save you Rs 10,000– Rs 1.5 lakh, depending on the vehicle.
- On top of GST cuts, festive offers and discounts could further reduce the effective price.
