GST Council revises tax slabs for automobiles: Small vehicles get relief while SUVs face higher levy

The Goods and Services Tax (GST) Council on Wednesday raised tax rates on certain categories of passenger vehicles, including larger cars and SUVs. At the same time, it reduced levies on smaller and mass-segment vehicles to ease affordability.

As per the notification, GST has been reduced from 28% to 18% on new pneumatic tyres, three-wheelers, ambulances, motorcycles up to 350cc, and small passenger cars. These include petrol, LPG or CNG-driven cars with engine capacity not exceeding 1200cc and length not exceeding 4,000 mm, and diesel cars with engine capacity not exceeding 1500cc and length not exceeding 4,000 mm.

At the same time, GST has been hiked to 40% for larger passenger cars, SUVs and high-end cars. This includes petrol or hybrid vehicles with engine capacity above 1200cc or length exceeding 4,000 mm, and diesel or hybrid vehicles with engine capacity above 1500cc or length exceeding 4,000 mm. Motorcycles above 350cc, yachts, and aircraft for personal use also fall under the higher slab.


Also Read: GST 2.0 gets the green light; what gets cheaper and costlier from September 22?
GST on all car parts and accessories has been rationalised to 18%. Rates for electric vehicles remain unchanged at 5%, continuing the government’s incentive for cleaner mobility.



Nirmala Sitharaman, who chaired the 56th GST Council meeting, said that the new rates will be effective from September 22, 2025.

How the old GST structure worked

Prior to the reform, all passenger vehicles except EVs were taxed at a uniform 28% GST, with an additional cess ranging from 1% to 22%, depending on engine size, fuel type, and body configuration. Electric vehicles alone benefited from a 5% GST.

Vehicle category	GST	Cess	Total tax payable
Sub-4m petrol up to 1200cc	28%	1%	29%
Sub-4m diesel up to 1500cc	28%	3%	31%
Cars up to 1500cc	28%	17%	45%
Cars above 1500cc	28%	20%	48%
SUVs (above 4m, above 1500cc, >170mm GC)	28%	22%	50%
Sub-4m hybrids	28%	Nil	28%
Hybrids above 1200cc petrol / 1500cc diesel	28%	15%	43%
Electric vehicles	5%	Nil	5%