The central government has reduced the GST slab, decreasing the tax on cars from 28% to 18%, which will be effective from September 22nd. This will impact the Maruti Wagon R, potentially making it cheaper by Rs 60,000-67,000. This is expected to boost the sales of small cars and provide relief to customers' wallets.
GST 2.0: The central government approved new GST slabs on September 3, 2025, under which the tax on cars has been reduced from 28% to 18%. This will affect the Maruti Wagon R, whose price could decrease by Rs 60,000 to Rs 67,000. The new system will come into effect from September 22nd, allowing customers to purchase small and luxury cars at lower prices than before. A growth of 6-10% in the car market is anticipated due to the GST reduction.
New Price of Wagon R
Maruti Suzuki Chairman R.C. Bhargava stated that the GST reduction will significantly decrease the price of the Wagon R. He mentioned that after the new GST slabs are implemented, the Wagon R will become approximately Rs 60,000 to Rs 67,000 cheaper. Additionally, other small cars from Maruti, like the Alto, might see a price reduction of around Rs 40,000 to Rs 50,000. This means customers will now be able to buy their preferred cars at a lower cost.
New GST Rule for Small and Large Vehicles
The GST Council has reduced the tax on small cars to 18%. This category includes cars with engines up to 1200cc and a length of less than 4 meters. On the other hand, cars with engines larger than 1200cc and a length exceeding 4 meters will now attract a 40% GST. Previously, these vehicles attracted a 22% cess in addition to GST, bringing the total tax to 50%. Now, the total tax will be reduced to 40%.
Luxury and larger vehicles will also be affected by the new GST slabs. Previously, these vehicles were taxed between 43% and 50%, which will now be reduced to just 40%. This will result in savings of approximately 5% even on a luxury car worth one crore rupees. This reduction will directly benefit customers' budgets.
Impact on the Car Market
R.C. Bhargava believes that the GST reduction will revitalize the car market. He stated that the market for small cars, which had slowed down recently, could now see a growth of approximately 10%. A growth of 6 to 8% is also being projected for the entire passenger car market.
The increase in customer participation in car purchases is not solely due to the GST reduction. Lower interest rates and additional benefits from income tax will also leave customers with more money for purchases. This is expected to improve car sales.
Benefit for Both Customers and Companies
The benefits of the GST reduction will not be limited to customers alone. Companies will also get an opportunity to increase sales. The rising demand for small and mid-size cars will also benefit production and dealership networks. Companies will be able to sell their old stock faster, and sales of new cars will accelerate.
Specifically, price reductions in popular cars like the Wagon R will attract customers. Furthermore, with reduced prices for the Alto and other small cars, customers will be able to purchase vehicles according to their budget.
Luxury Cars and Large Vehicles Also Affected
Along with small cars, buyers of luxury cars and large vehicles will also benefit. The reduction in GST on a luxury car worth one crore rupees will result in savings of up to 5%. This will allow customers who are planning to buy expensive cars to purchase vehicles at a slightly lower cost.
Additionally, an improvement in sales of large and mid-size cars is also expected. This will create new demand in the auto industry, and steps to increase production can be taken.
