GST Reforms Reshape Car Prices: Implications for Maruti Suzuki, Tata, Kia, and Mahindra

The recent GST reforms are creating waves in the Indian automotive sector. The GST Council’s decision during its 56th meeting has altered the tax structure for cars, potentially influencing consumer choices. The most notable change involves the reduction of GST on small cars to 18% from 28%, while the tax on larger vehicles, including SUVs, is now set at 40%. Electric cars continue to benefit from a 5% GST, and auto components are taxed at 18%. The definition of a small car includes vehicles under four meters in length, with specific engine capacity limits. This shift might impact the sales of mid-size SUVs, which now face the same tax rate as luxury cars. Manufacturers like Maruti Suzuki, Tata, Kia, and Mahindra are anticipated to revise prices. Maruti Suzuki’s new EVitara will only be subject to a 5% GST, which could increase sales. Companies are expected to adjust prices to pass on benefits to consumers. This impacts the price of cars like the Alto, Wagon R, and more.