The Goods and Services Tax (GST) revision is set to give India’s automobile industry a major boost ahead of the festive season. Dealers say customer inquiries have already jumped by 20–25% since the announcement, with the new rates taking effect from September 22, 2025.
Rising Festive Demand
Former FADA president Vinkesh Gulati said that footfall at showrooms and calls from buyers have surged.
“Customers are eager to know the exact prices under the new GST structure. We expect sales momentum to kick in from Navratri itself,” he said.
Current FADA chief C S Vigneshwar called the 56th GST Council meeting a “watershed moment” for the auto retail industry, saying it will improve affordability and strengthen India’s mobility ecosystem.
Structural Reform for Mobility
Shailesh Chandra, MD of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said the reforms reflect Prime Minister Narendra Modi’s vision for a next-generation GST framework.
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GST on electric vehicles (EVs) stays at 5%, reinforcing India’s commitment to sustainable mobility.
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GST on small cars has been reduced to 18%, widening access to affordable personal transport.
“These steps will accelerate EV adoption, strengthen domestic manufacturing, and push India toward a self-reliant mobility future,” Chandra added.
However, the Federation of Automobile Dealers Associations (FADA) has flagged potential losses of around ₹2,500 crore linked to cess balances in dealer accounts, as no clarity was given in the September 3 meeting. Dealers want urgent guidelines to avoid disputes during the transition.
Impact on Luxury Vehicles
The biggest change comes for the luxury and premium car segment:
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GST on high-end cars has been fixed at 40% (earlier 28%).
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Crucially, the additional cess (17–22%) has been removed.
Earlier, the combined tax often pushed the on-road cost of luxury vehicles to 50% or more. Now, with a flat 40% GST and no extra cess, prices of SUVs and premium sedans are expected to dip marginally.
With streamlined GST slabs effective from September 22, the industry is preparing for a strong festive season. Dealers say the move not only simplifies taxation but also creates fresh optimism across vehicle categories — from entry-level cars to luxury SUVs.
