GaadiWaadi –
GST cut on sub-1200cc petrol and sub-1500cc diesel cars slashes prices by up to 10%, boosting affordability nationwide
The government’s sweeping GST 2.0 reforms have delivered a major boost to India’s small car segment. Among the highlights, GST on sub-1200cc petrol cars under 4 metres and sub-1500cc diesel cars under 4 metres has been reduced from nearly 29–31% to a flat 18%, thanks to the abolition of cess.
The Old vs New Tax Regime
-
Petrol cars (≤1200cc, ≤4m): Earlier taxed at 28% GST + 1% cess (29% total)
-
Diesel cars (≤1500cc, ≤4m): Earlier taxed at 28% GST + 3% cess (31% total)
-
Now (Both categories): A flat 18% GST, no cess
This is one of the most significant tax cuts in recent years for mainstream cars.
What It Means for Buyers: Quick Math
Case 1: Petrol Car at ₹10 lakh (with 29% GST earlier)
-
Base price (ex-GST) = ₹10,00,000 ÷ 1.29 ≈ ₹7,75,194
-
New price @18% GST = ₹7,75,194 × 1.18 ≈ ₹9,14,729
You save ~₹85,271 (≈8.5%)
Case 2: Diesel Car at ₹15 lakh (with 31% GST earlier)
-
Base price (ex-GST) = ₹15,00,000 ÷ 1.31 ≈ ₹11,45,038
-
New price @18% GST = ₹11,45,038 × 1.18 ≈ ₹13,50,146
You save ~₹1,49,854 (≈10% cheaper)
These examples show how GST 2.0 puts lakhs of rupees back in the buyer’s pocket, especially in the compact and entry-level diesel segment.
Boost for Mass-Market Automakers
Brands like Maruti Suzuki, Hyundai, Tata Motors, and Honda—all of whom rely heavily on small cars—stand to gain the most. The tax cut improves affordability in entry-level and compact segments, categories that had been losing traction due to rising costs and changing consumer preferences.
EVs and Tractors Retain Their Edge
Even as petrol and diesel cars get relief, Electric Vehicles (EVs) continue at just 5% GST—the lowest of all vehicle categories. This ensures EVs remain competitive and aligned with India’s long-term green mobility goals.
Meanwhile, the tractor industry has also emerged as a big winner. GST on tractors has been cut from 12% to 5%, while parts such as tyres, gearboxes, and hydraulic pumps also fall to 5%. This 7% reduction makes new tractors cheaper and lowers maintenance costs, directly benefiting farmers and rural India.
Dr. Anish Shah, Group CEO & MD, Mahindra Group, welcomed the reforms, calling them a defining moment:
“The next-generation GST reforms announced today mark a defining moment in India’s journey towards building a simpler, fairer, and more inclusive tax system…
At Mahindra, we view these reforms as transformative. They simplify compliance, expand affordability, and energise consumption, while enabling industry to invest with greater confidence. This bold step is in line with the vision articulated by the Hon’ble Prime Minister of building a citizen-centric, future-ready Bharat. It strengthens India’s economic foundations and will help drive the next phase of equitable and inclusive growth—our journey towards Viksit Bharat.”
This statement captures the broader sentiment across the sector—optimism, relief, and readiness to realign business strategies with the new regime.
Conclusion
By bringing 1200cc petrol and 1500cc diesel cars into the 18% GST slab, GST 2.0 offers immediate savings for buyers and demand revival for automakers. Together with EVs at 5% and tractors at 5%, the reforms strike a balance between urban affordability, rural empowerment, and sustainable growth.
The post New GST Rates – Small Petrol & Diesel Cars Get Price Cut By Upto Rs. 1.5 Lakh appeared first on Gaadiwaadi.com – Latest Car & Bike News by Gaurav Yadav.
