New GST Rates to Increase the Cost of Luxury Cars

The implementation of the GST adjustments, initially proposed last month, has brought significant changes to the automotive industry. Following the 56th GST Council meeting, the 12% and 28% tax brackets have been eliminated. Now, the structure primarily consists of 5% and 18% slabs. This change has already begun to influence car prices. The new regulations offer relief to buyers of compact petrol and diesel cars. Conversely, the prices of luxury and high-end electric vehicles are expected to rise. The revised GST framework provides advantages for smaller vehicles. Cars under four meters, equipped with engines up to 1200cc for petrol and 1500cc for diesel, will experience a decrease in price. However, prospective buyers of SUVs, premium sedans, and luxury vehicles should prepare for increased expenses. The new system classifies vehicles exceeding four meters, and those with engines larger than 1200cc (petrol) or 1500cc (diesel), as luxury goods, subjecting them to a 40% GST rate. This includes SUVs, MUVs, MPVs, and XUVs with a length of over 4000mm and a ground clearance of 170mm or higher.