A recent GST reform is reshaping the car market, particularly affecting brands like Maruti Suzuki, Tata, Kia, and Mahindra. The GST Council’s 56th meeting brought significant changes, including a reduction in the tax on small cars to 18% and an increase in the tax on larger vehicles, including SUVs, to 40%. Electric vehicles retain a 5% GST, while all auto components are taxed at 18%. Small cars are defined by specific length and engine capacity criteria. The impact of these changes could be considerable, with potential shifts in consumer behavior towards electric cars and hybrids. The new tax rates may affect the sales of mid-size SUVs, as these vehicles face the same tax burden as luxury cars. Several car manufacturers have already announced price adjustments to pass on the benefits to consumers. The revised rates will likely influence buying decisions for models from various brands, including Maruti Suzuki’s Alto, Wagon R, and others.
