India’s GST rules for vehicles were reworked in early September 2025. The new structure is simpler. It affects almost every car buyer. Small cars get cheaper. Big cars and many SUVs face a new unified rate. Companies have started passing the savings to customers. This article explains the change clearly. It shows how old taxes differed from the new ones. It gives practical price examples for Tata, Mahindra, Maruti Suzuki and Hyundai models. It also has a big comparison table, quick specs, and FAQs for Indian buyers. Sources used include automaker announcements and leading auto media.

At a glance — what changed

• GST slabs were simplified into two main rates that cover most passenger vehicles.
• Small passenger cars (defined by engine/length rules) are now taxed at 18% GST.
• Most other passenger cars and SUVs now attract 40% GST (flat). The previous complicated mix of 28% GST + varying cess is replaced.
• Electric vehicles and some low-tax items are treated differently (EVs continue to have a special low rate in many cases).
• The effective tax burden moved down for many sub-4-metre and small-engine cars. For larger SUVs and luxury cars the effective tax may fall or rise depending on the earlier cess level. The Economic Times

Why this matters to you: GST is part of the manufacturer’s ex-showroom price. When GST falls, the ex-showroom price can fall. Manufacturers have begun to pass on those savings ahead of the festival season.

Quick tax comparison table (old vs new)

Notes: actual earlier effective tax depended on exact cess for the model. The new system removes the multiplicity of cess slabs and simplifies calculations. The Economic Times

What automakers announced (short summary)

• Tata Motors said it will pass on the full GST reduction. It published expected maximum reductions per model (examples: Tiago up to ₹75,000; Nexon up to ₹1.55 lakh; Harrier up to ₹1.40 lakh). The company asked customers to check exact variant prices with dealers. Tata Motors
• Mahindra also said it will pass on the full benefit and cut prices across its line-up. Some diesel models see cuts up to around ₹1.56 lakh, depending on model and variant. Mahindramint
• Maruti Suzuki leadership signalled big benefits for small cars like Alto and WagonR. Media outlets have published expected price falls for many Maruti models. The Economic Times
• Hyundai and other OEMs issued tentative variant-level lists and specialist sites produced tentative new price lists (used by dealers as reference). Expect manufacturer confirmations and final prices with your local showroom. V3Cars

How I built the example price table

1. I used current ex-showroom prices from trusted price aggregators or maker pages (representative variant / commonly referenced ex-showroom value). Examples include CarDekho / CarWale and maker price pages. CarDekho
2. I used the reductions announced by Tata and Mahindra, and the variant calculations published by auto media and specialist portals (V3Cars, ET, Mint, HT) to estimate new ex-showroom values. Where full model lists were not yet confirmed by OEMs, I used reputable tentative lists from auto sites and noted those as estimates. Tata Motors
3. All prices below are indicative. Final ex-showroom prices depend on exact variant, local state registration, accessories and final OEM pricing decisions. Always confirm with the dealer.

Representative model price table — old vs estimated new (selected models)

Each row shows: model — representative ex-showroom (approx, Delhi) — reported / estimated max reduction — estimated new ex-showroom (approx).

Tata (official reductions announced)

(Tata numbers are from the company’s public statement; ex-showroom values are representative examples from price portals.) 

Mahindra (company passed on benefit; media listed model cuts)

(Mahindra posted a press note and media published variant-level impacts; exact numbers vary by variant and drivetrain.) Mahindra

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Maruti Suzuki (expected / media estimates)

Maruti has signalled it will pass on benefits for small cars. Media outlets published tentative benefits (example numbers below are reported estimates and will be refined when Maruti confirms exact variant prices):

(Maruti’s final list to be confirmed by the company. Chairman comments indicate a helpful move for small-car demand.)The Economic Times

Hyundai (media / specialist tentative lists)

Hyundai pricing is expected to move variant-by-variant. Specialist sites compiled tentative lists for some popular models:

(Use specialist site lists for full variant-level tentative pricing. Hyundai will confirm official prices.) 

Observations and what buyers should know

1. Small cars benefit most. If the car falls into the sub-4m / small-engine category, the tax drop to 18% is meaningful. Expect the largest percentage price falls for compact models. The Economic Times
2. Large SUVs still get relief. Even where the new GST is 40%, it replaces higher effective taxes (GST+cess) for many big SUVs. So they too see price falls — sometimes by substantial amounts in rupees. 
3. EVs are treated separately. Many electric models have special low rates or incentives. Expect OEMs to clarify EV price movement separately. The Economic Times
4. Variant-level impact matters. The same model’s different variants can sit in different tax buckets (engine size, length) so the price change is variant-specific.
5. On-road price = ex-showroom + state RTO + insurance + other fees. State charges are unchanged. So on-road savings will be roughly in line with ex-showroom reductions, but not identical.
6. Dealers and OEMs can round prices. Some makers will adjust margins or round prices to psychological levels (e.g., keep a popular variant’s price at a neat figure). Media lists are therefore tentative until OEMs publish firm prices.

Quick spec table — GST 2.0 essentials (for buyers)

Top 10 FAQs (short answers)

Short checklist before you buy (practical)

1. Check the exact variant and engine/length specs. Those determine the tax bracket.
2. Ask dealer for a formal price breakup. Compare ex-showroom old vs new invoice.
3. For EVs, check battery variant, subsidies and insurance.
4. If you plan to use festival discounts, combine both (GST pass-on + festival offer).
5. If you trade-in, negotiate the total package. Dealers may be flexible.

Final words — what this means for India’s car market

GST 2.0 is a major simplification. It lowers entry barriers for many buyers. Small cars become more affordable. Mid-size and large SUVs also become cleaner to price, because cesses are removed. OEMs have moved quickly to pass on the benefit. The festival season is likely to see more activity. If you are planning to buy, use this moment to negotiate and confirm firm, variant-level prices from dealers.