Small Cars And Motorcycles GST Rates: The Indian government has announced a major change in GST rates for cars and motorcycles. The move is aimed at boosting growth in the auto industry. The GST reduction is expected to give a much-needed push to the automobile market, which has been waiting for a stimulus to speed up sales growth. The revised GST rates will come into effect from September 22.
GST On Petrol, Diesel And Hybrid CarsÂ
Petrol, diesel and hybrid cars that were earlier taxed at 28 percent will now attract 18 percent GST, provided they meet the small car definition. This includes cars under 4 metres in length with engines below 1,200cc (petrol) or below 1,500cc (diesel).
Bigger cars, too, will see some benefits. Earlier, large vehicles attracted 28 percent GST plus a cess, pushing the effective tax rate to 48-50 percent. Now, all such cars will be taxed at a flat 40 percent, regardless of engine type or fuel.Â
GST On Smaller Motorcycles
Smaller motorcycles will also get relief. Bikes with engine capacity under 350cc will now be taxed at 18 percent, down from 28 percent. However, the news is not as positive for big motorcycles.Â
GST On Bikes Above 350cc
Bikes above 350cc, which earlier had a combined tax rate of 31 percent (28 percent GST and 3 percent cess), will now be taxed at 40 percent. This puts them in the same bracket as sin goods like alcohol and tobacco.
GST On Electric Vehicles Remains Unchanged
Meanwhile, GST on electric vehicles remains unchanged at 5 percent. Despite speculation of a tax hike, the government has kept rates steady to support its push for electric mobility. This will especially benefit luxury EV players, where adoption is already higher, about 8 percent compared to 2 percent industry-wide.