Maruti Suzuki and Tata Motors, among other auto companies, have started passing on the benefits of the recent GST rate cut to buyers, leading to significant price reductions across various car segments. The tax cut, which drops GST on small cars from 28% to 18% effective September 22, 2025, aims to boost demand and make vehicles more affordable for consumers.
Key Changes in GST and Price Impact
-
GST Rate Changes: Passenger vehicles with petrol, LPG, or CNG engines up to 1,200 cc (and diesels up to 1,500 cc), provided they are under 4,000 mm in length, will now be taxed at 18% GST instead of the previous 28% plus cess.
-
Wider Applicability: This cut includes popular models from Maruti Suzuki and Tata Motors, such as the Alto, Wagon R, Tata Punch, and Nexon.
-
Larger Vehicles: Larger cars and SUVs, previously taxed at up to 50% (GST + cess), will now have a flat 40% GST with no cess, making the taxation structure simpler and prices lower for premium cars as well.
Specific Reductions and Company Announcements
-
Maruti Suzuki: The price of the Alto could drop by ₹40,000–50,000, entry-level Wagon R by ₹60,000–67,000, with more models expected to see similar reductions.
-
Tata Motors: Announced a full pass-through of the GST reduction, resulting in price reductions up to ₹1.55 lakh on select cars and SUVs for buyers from September 22, 2025.
-
Benefit to Buyers: Both companies stated these cuts are aimed at aiding affordability and encouraging new purchases, especially ahead of the festive season.
Industry-Wide Effects
-
Market Outlook: The reduction is expected to boost passenger car sales by 6–10% for the financial year, reversing previous slowdowns in growth. Segment-wise, compact cars and hatchbacks, which had seen a decline, are expected to see renewed demand.
-
Auto Parts: Most auto components now have GST rates of 18%, which could also lower the overall cost of ownership and maintenance.
This GST reduction marks a major reform benefiting buyers and is being fully passed on by leading manufacturers, including both Maruti and Tata Motors.