GST rate cut on cars: The GST Council has given some happy news to car buyers. They decided to reduce the tax on small cars, and this change will make many popular cars cheaper. The rate has gone down from 28% to 18%, and this will give a big relief to families who want to buy budget cars. The government hopes this will also boost the automobile industry, which has been waiting for more demand.
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What counts as a small car?
The government made some clear rules to say which cars can get the lower tax. Petrol, LPG and CNG cars must have engine capacity up to 1200 cc and the length should not cross 4000 mm.
For diesel cars, the engine size limit is a little bigger at 1500 cc, but the length rule of 4000 mm stays the same. If a car is longer or has more engine power than this, then it is not called a small car. Those bigger cars will still pay the old high tax rate of 28%, reported Upstox.
This means hatchbacks and compact sedans that are very popular in Indian cities will become cheaper. People looking for a small family car or a city ride will benefit. But if someone wants a luxury sedan, a big SUV, or an imported car, there is no change. They will still have to pay 28% GST and sometimes even more with extra cess.
same tax for all fuel types
The new rate is now the same across fuel options. Whether someone buys petrol, diesel, LPG or CNG, as long as the car falls under the small car size, the GST is 18%. The only difference is in the engine capacity cap, 1200 cc for petrol and 1500 cc for diesel. This makes things simple for buyers and dealers both.
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But the luxury cars and SUVs remain in the higher tax category. For them, GST can even go up to 40%. So the new relief is only for small and compact cars, which are the main choice of middleclass families.
