GST affect car price in India. we need to take a look at its impact on car prices. To prevent a heavy loss in sales in the run-up to the implementation of Goods and Service Tax (GST) on July 1, Carmakers across the country rolled out some discounts to attract potential buyers. Here is how GST is expected to infect auto market in India Under the current tax system, a car buyer pays VAT, excise, infra cess and green cess in some states. All these taxes together determine the ex-showroom price of a car. Sales of luxury cars and SUV were expected to slow down after it became clear that prices across these segments would reduce under the new tax regime. Some buyers also hold back their purchases. Car dealers too offered attractive discounts to clear stocks before GST affect car price in luxury segments like BMW, Audi, Mercedes-Benz, JLR (Jaguar Land Rover) were the first to announce price cuts along with additional benefits like low-interest rate on finance and attractive insurance policies. According to the GST system announced by the government, there has been a considerable reduction in indirect taxes on large cars and SUVs (with an engine more than 1,500cc) to 43 percent from an earlier rate of 45-55 percent.

GST Affect on Small Cars ( Alto, Kwid, Polo, i20, Celerio & etc)

Before GST

After GST Change
Tax: 12.5% 28%  
VAT & other levies 12.5% to 14.5% Cess: 1% to 3%  
Total: 25% to 27.5% Total: 29%(+)  

(+)1.5% to 2%


GST affect car prices (small segment cars)

Source: Autobild

Under the current tax structure, small segment cars (less than 4 metre in length and petrol engine under 1,200 cc and diesel engine under 1,500 cc) are taxed at 12.5 % and with another 12.5% to 14.5% of VAT and levies, the total rate goes up to between 25% to 27.5% respectively.According to the implementation of GST(Goods and Service Tax), the new tax rate will raise the total tax figure to more than 29%, resulting in an increase in prices of small segment cars. In the most price-sensitive segment of the country’s automobile market, this increase could have a negative effect on the buying sentiment and it also affects the manufacturers adversely.





 GST Affect on SEDANs and SUVs ( Creta, vento, Ciaz, Honda City & etc)


Before GST After GST Change
Total Tax, VAT,

Other levies

Tax: 28%

Cess: 15%

Around 43%  

Total 43%




GST affect car price(budget segment)

Source: (


Midstream cars such as the Honda City and the Hyundai Creta are likely to remain unaffected by the GST rates as these vehicles are already charged at around 43% of the tax rate. The flat 28% tax and 15% of cess will bring the total to 43%, resulting in almost no change.




Before GST After GST Change
Total Tax, VAT,

Other levies

Tax: 28%

Cess: 15%

Around 55% Total: 43% (-)12%


GST affect car price ( luxury segment)




 People considering to buy luxury cars or SUVs though have a reason to cheer as GST might bring down the prices of such vehicles. Vehicles falling in this segment are subjected to a heavy tax rate of around 55% in total, after the implementation of GST, this rate will come down significantly to 43% (28% + 15%), a total reduction of 12% in the tax rate. This means your next luxury car or SUV could soon become considerably cheaper.

 Mumbai:  India’s largest luxury carmaker Mercedes-Benz announced the reduction in prices of all locally made cars to align with prices in the goods and services tax (GST) era—the first carmaker company to do so. In a statement, Mercedes-Benz India Pvt. Ltd said, the price revision on a weighted average of 4% will be effective immediately, and is aimed at providing value to a customer’s purchase decision before GST implementation.