Namaste India welcome to Dream Machine with a fresh new blog post 🙏
Big Relief for Auto Sector with New GST Rates
In 2025, significant price cuts are expected for small and mid-size cars, bikes, tractors, three-wheelers, and car services. The Indian government has decided to implement new GST slabs starting 22 September 2025, which will benefit millions of vehicle buyers. Due to this change, entry-level cars and bikes will become much cheaper, while only premium bikes will see a price increase.
---
🚗 Biggest Relief — Sub-4 Meter Cars
If your preferred car is less than 4 meters in length and has a petrol engine under 1.2L or diesel engine under 1.5L, its price will drop significantly. Previously, these cars were taxed at 29–31%, but this has now been reduced to just 18%. This includes popular models like the Alto, Swift, WagonR, Baleno, Tata Punch, XUV300, Nexon, Sonet, Venue, and i20. Estimates suggest that sub-4-meter cars priced up to ₹10–15 lakh will be ₹1–1.5 lakh cheaper .
---
🚙 Big Cars, Big Savings
If you are planning to buy a large SUV like the Creta, Seltos, Grand Vitara, Toyota Fortuner, XUV700, or Tata Safari, or a luxury 7-seater from Mercedes, BMW, or Audi, there is relief for you too. Where the total tax was previously 43–50%, it will now be a flat 40% slab. This means the Fortuner GR Sport could become ₹5–6 lakh cheaper, and large models like the XUV700 could see direct savings of up to ₹2 lakh .
---
🏍 Two-Wheelers — Massive Benefit Up to 350cc
Bikes up to 350cc—such as the Hero Splendor, Honda Activa, Bajaj Platina, Pulsar, TVS Apache, and Royal Enfield Classic—will now attract a GST of 18%, down from 28%. This means 98% of bikes sold in India will become more affordable .
---
⚠️ Only One Segment Faces a Setback
Bikes with engines over 350cc—such as the Royal Enfield 650cc, Triumph, Ninja, and Harley Davidson—will now be taxed at 40%, up from 31%. Customers in this segment will have to pay more .
---
🛺 Three-Wheelers, Buses, Trucks, and Tractors Also Benefit
GST on three-wheelers, trucks, tractors, and buses has also been reduced to 18%, which will lower the cost of transport and agricultural vehicles .
---
🔧 Spare Parts and Services — Now a Uniform 18% GST
Previously, spare parts and servicing had varying tax slabs—sometimes 28%, sometimes 18%. Now, all auto spare parts (brake pads, exhausts, batteries, bumpers, etc.) and car/bike servicing will attract a flat 18% GST. This will also reduce maintenance bills .
---
⚡ Electric Vehicles vs. Petrol/Diesel
Electric vehicles (EVs) and their batteries will continue to be taxed at the lowest GST rate of 5%, making EV purchases even more affordable .
Petrol and diesel are currently outside GST and subject to state VAT. If they are brought under GST in the future, petrol and diesel could become cheaper.
---
✅ Conclusion
The 2025 GST reforms will bring fantastic discounts to most automobile categories. The more expensive the car or bike, the greater the benefit—with the only exception being large-engine bikes. Car and bike servicing has also become more economical.
If you’re planning to buy a new car, this festive season is the best time!