Will the proposed GST reforms and SUVs in India make cheaper? Here's what to do now

India’s government is reviewing GST for cars, which is currently in the highest tax rate. This renovation aims to reduce classification disputes and costs for consumers. Vehicles to become more affordable after the government has proposed GST reforms on car (Reuters). The Indian government puts a major review on the structure of goods and services (GST), which will greatly affect the automotive industry. The GST on cars – currently in the highest tax rate of 28 percent – will be restructured to solve classification disputes related to the engine capacity and vehicle size, and eventually benefit the buyers, according to the government’s sources known to PTI. Current tax structure for vehicles? Currently, most cars are taxed at 28 percent. In addition, a compensation chess, ranging from 1 to 22 percent, is applied, depending on the type of vehicle. This leads to a wide range of total tax incurrence on cars, as low as 29 percent for small petrol cars to as high as 50 percent for SUVs. This complex system has led to regular classification disputes. In contrast, electric vehicles (EV) are currently taxed at a much lower rate of 5 percent. Sources told PTI that, as the center suggested that the GST system after a dual rate structure of 5 and 18 percent and a 40 percent plate for some items, also put cars in a plate to put an end to disputes arising from the classification of cars through the engine capacity and the length. What do these changes mean for car buyers? The proposed changes are expected to increase demand and sales as cars will become more affordable for the average consumer. By streamlining the tax structure and lowering the total tax burden on a wide range of vehicles, the new system is aimed at stimulating consumption and strengthening the economy as an important part of the government’s growth strategy. The exact new GST tariff for cars has yet to be completed by the government. The way forward for GST reform of the center’s proposal, which includes the elimination of the 12 and 28 percent plate, will be discussed by the GST ministers (glue) on August 21, 2025. After this, the GST Council, which will approve the final GST rate structure, is expected to meet and approve the final GST rate structure. Currently, GST is a four -page structure of 5, 12, 18 and 28 percent, where essential items are taxed at zero or a rate of 5 percent and luxury and sin -goods are at 28 percent plate. The center suggested that the rate rationalization has only 2 sheets in GST – 5 and 18 percent and a separate rate of 40 percent only for some goods. Sources also told PTI that the rate of 40 percent would only apply to 5-7 goods, probably in the category of luxury and sin goods.