GST Overhaul: Driving Down Costs for Small Cars and Bikes

The GST Council has approved a major overhaul of the Goods and Services Tax system, promising to make small cars and entry-level bikes more affordable. With the new rates set to take effect on September 22, coinciding with the first day of Navaratri, the council aims to simplify taxation and boost the automotive sector.

The revised structure includes a reduced GST rate of 18 percent for petrol, LPG, and CNG vehicles under 1,200 cc, and diesel vehicles under 1,500 cc. This is down from the previous 28 percent rate. Motorcycles up to 350 cc will now also be taxed at the lower 18 percent rate. However, larger automobiles, racing cars, and motorcycles above 350 cc will see a tax increase to 40 percent.

Mercedes-Benz India MD and CEO Santosh Iyer applauded the government's decision, emphasizing improved GST rates as a long-standing industry demand. The streamlined rates are expected to provide a stimulus for consumption and bring momentum to the automotive market, considered vital for India's economy. In addition, the unchanged GST rate for electric vehicles reinforces a commitment to transitioning towards a decarbonized future while reducing oil imports.

(With inputs from agencies.)