Small Cars and Motorbikes Get Cheaper, Luxury Vehicles Also See Tax Relief

Small Cars and Motorbikes Get Cheaper, Luxury Vehicles Also See Tax Relief

Last Updated Sep - 04 - 2025, 12:03 PM | Source : Fela News

Government slashes GST rates: small cars, bikes, and three-wheelers cheaper; luxury vehicles see reduced tax.

The government has rolled out a major relief for consumers by cutting down GST rates on vehicles. From September 22, 2025, small cars, motorbikes, and three-wheelers will become more affordable. This reform is expected to directly benefit the common man while giving a fresh push to the automobile sector.

For small cars, the relief is significant. Petrol, petrol-hybrid, LPG, and CNG cars up to 1200cc will now attract only 18% GST, down from the earlier 28%. However, this benefit is limited to cars under four meters in length, meaning hatchbacks and compact cars will now be lighter on the pocket.

Diesel car buyers also stand to gain. Diesel and diesel-hybrid cars up to 1500cc and under four meters in length will also fall under the 18% slab, compared to 28% earlier.

Two-wheeler and three-wheeler buyers are in for a treat as well. Motorcycles up to 350cc, which previously carried 28% GST, will now attract just 18%. Similarly, three-wheelers and transport vehicles will also become cheaper due to the tax cut.

For larger and luxury vehicles, the government has restructured the tax. Petrol cars above 1200cc, diesel cars above 1500cc, motorcycles over 350cc, and premium categories such as SUVs, MUVs, and MPVs will now attract 40% GST. This is still lower than the earlier combined 50% burden of 28% GST plus 22% cess, as the cess has now been removed. Even helicopters, yachts, and sports vehicles are included in this revised slab.

Industry experts believe the move will encourage higher sales during the upcoming festive season. While luxury vehicles will remain costly, the reduced rates bring some relief. Overall, the decision ensures affordable mobility for the masses while keeping high-end consumption in check.

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