Starting September 22, 2025, the first day of Navaratri, India’s automobile landscape is shifting gears. The GST Council has approved a major overhaul in the way vehicles are taxed, with a simplified and more targeted structure that’s set to make many cars and two-wheelers more affordable for Indian consumers.
At the heart of the GST revamp is a push to reduce costs for everyday buyers. Small cars and entry-level motorcycles, the backbone of India’s personal mobility, will now fall under an 18% GST bracket, down from the previous 28%.
This category includes:
This change applies to some of the most popular models in the country, such as the Maruti Swift, Tata Altroz, Hyundai Exter, Renault Kwid and WagonR.
For two-wheeler buyers, motorcycles up to 350cc like the Hero Splendour, Honda Shine, TVS Apache, Bajaj Pulsar and even the Royal Enfield Classic 350 now come with a lighter tax burden.
For families, students, gig workers and rural commuters, these tax cuts translate directly into lower on-road prices and easier financing.
The reforms extend beyond personal vehicles. Three-wheelers, commercial trucks, buses and ambulances will also enjoy a reduced 18% GST, instead of the earlier 28%. This is a significant move aimed at making logistics, public transport and rural connectivity more cost-efficient.
Even tractors under 1,800cc will now attract just 5% GST, down from 12% and spare parts like tyres, tubes and hydraulic components used in farm machinery have also been brought under the 5% bracket. These changes will benefit small farmers and MSMEs in agriculture, cutting costs across the entire rural supply chain.
The new structure keeps electric vehicles (EVs) at the lowest 5% GST rate, reinforcing the government’s continued commitment to clean mobility. Small hybrid vehicles will also see reductions, further encouraging the adoption of greener technology. By keeping eco-friendly options affordable, the reforms align with broader climate goals and India’s EV push.
While affordable vehicles get a break, mid-size and larger cars with petrol engines above 1,200cc, diesel engines above 1,500cc or any car longer than 4,000mm will now attract a flat 40% GST. This also applies to bikes over 350cc.
This includes models like the Tata Harrier, Mahindra XUV700, Hyundai Creta, Kia Seltos, and bikes such as the KTM Duke 390 or Royal Enfield Himalayan 450.
However, this flat rate replaces the old system of 28% GST + a compensation cess (which ranged from 17% to 22%). So, even if the new rate seems steep, in many cases it lowers the total tax burden, especially since buyers and manufacturers can now claim full Input Tax Credit (ITC).
This isn’t just about cheaper vehicles. The GST overhaul is part of a broader economic strategy to:
One of the most impactful moves in the reform is the harmonisation of GST rates on auto components. Regardless of HS codes, most auto parts, including batteries, tyres, electronics and more, will now fall under a flat 18% GST.
For the battery industry, this is key.
With tax burdens eased, battery manufacturers can reduce input costs, improve margins and pass on savings to customers. Plus, higher demand for new vehicles will naturally lead to increased demand for OEM and aftermarket batteries, energising the entire ecosystem.
Now that the new slabs are live, the big question is how manufacturers will respond. Will they pass on the full benefit to buyers? Or adjust pricing to balance margins? Over the next few months, the market will show how much of these gains get passed on to end-users.
What’s certain is that more people will consider replacing older vehicles, upgrading to newer models that are safer, more efficient and more eco-friendly.
As vehicle ownership becomes more accessible, reliability and performance become even more critical. Tata Green Battery, a trusted name in energy storage, is ready to power this new wave of mobility.
Whether it’s for your first bike, a family hatchback, a fleet of commercial vehicles or hybrid cars, Tata Green Battery ensures you stay powered with dependable performance, long life and eco-conscious engineering.
The GST reforms are a fresh start for the Indian automobile market. At Tata Green Battery, we’re proud to be part of this journey, helping every ride begin with confidence.
Ready to drive the future? Let Tata Green Battery be your power partner.
Awareness - September 18, 2025
