The GST 2.0 reforms promise a wide-scale effect on automobiles and many other goods, where common people would benefit the most, making it more than an update but a full-scale price revolution.
Set to see light on 22nd September 2025, this change will be impactful on the automobile industry, as many vehicles will see a reduction in prices, while some will see a straight hike.
If you’re eyeing a commuter bike, planning to upgrade your car, or running a business dependent on goods transport, this is the right time to know and understand the impact of GST 2.0 on Automobiles.
From two-wheelers to luxury SUVs, the tax shake-up is bold, far-reaching, and already influencing market prices. Read on to learn more about how these changes reshape affordability, ownership, and operational costs.
GST Rates on Two-Wheelers
Good news for India’s two-wheeler enthusiasts.
As one of the major impacts of GST 2.0 on automobiles, the two-wheeler landscape just got more wallet-friendly, especially for everyday commuters.
The humble two-wheeler, a lifeline for millions, is now more affordable with a reduced GST rate across commuter and utility models.
Here is a complete overview of the impact of GST 2.0 on two-wheelers:
| Goods Name and Type | Old GST | New GST |
|---|---|---|
| Motorcycles (engine capacity ≤ 350 CC) | 28% | 18% |
| Motorcycles (engine capacity > 350 CC) | 28% | 40% |
| Parts & accessories of motorcycles (heading 8711) | 28% | 18% |
This benefits salaried individuals, students, and gig economy workers who rely on two-wheelers for everyday commuting, significantly reducing their upfront costs.
0
Bad
Check your Credit Score for Free
Your credit score is updated monthly and gives you insight into your creditworthiness. Take control of your financial future today.
New GST Rates on Three-Wheelers
Three-wheelers, often the economic bridge between rural and urban India, now fall under a friendlier GST slab.
Here is an overview of the impact of the newest GST reforms on three-wheelers:
| Goods Name and Type | Old GST | New GST |
|---|---|---|
| Three-wheeled vehicles | 28% | 18% |
Auto-rickshaw drivers, rural transporters, and small delivery businesses will see lower vehicle costs, improving margins and boosting local connectivity.
Read more on the Impact of GST Reforms on the Common Man
GST Rates on Four-Wheelers
From family hatchbacks to high-end SUVs, four-wheelers now have clearly defined tax brackets separating budget from luxury. Under the latest GST reforms, family-friendly budget 4-wheelers will see a reduction in price.
Here is the detailed impact of GST 2.0 on four-wheeler automobiles:
| Goods Name and Type | Old GST | New GST |
|---|---|---|
| Small cars | 28% | 18% |
| Petrol/LPG/CNG cars (engine capacity ≤ 1200 cc, length ≤ 4000mm) | 28% | 18% |
| Diesel cars (engine capacity ≤ 1500 cc, length ≤ 4000mm) | 28% | 18% |
| Hybrid cars (spark-ignition, engine capacity ≤ 1200 cc, length ≤ 4000mm) | 28% | 18% |
| Hybrid cars (diesel, engine capacity ≤ 1500 cc, length ≤ 4000mm) | 28% | 18% |
| Fuel Cell Motor Vehicles (incl. hydrogen vehicles) | 12% | 5% |
Middle-class car buyers will benefit from price drops, while luxury car owners and premium fleet operators will face steeper taxes, impacting high-end consumption.
Personal Loan
Quick Approval in 24 Hours
💰 No processing fee for first 100 customers | ⚡ Digital KYC in 5 minutes
Latest GST Rates on Other Vehicle Types
Special-use vehicles like yachts, aircraft for personal use, bicycles, unmanned drones, and tanks are now aligned with their social utility via targeted GST rates. Of course, these are not for common people, and hence, the tax bracket has been broadened for some, while reduced for some utility-type vehicles.
Here is a complete overview of the impact of GST 2.0 on some ‘uncommon’ vehicles.
| Goods Name and Type | Old GST | New GST |
|---|---|---|
| Buses, trucks, ambulances | 28% | 18% |
| Road tractors (semi-trailers, engine capacity > 1800 cc) | 28% | 18% |
| Motor vehicles for transport of 10+ persons (excl. bio-fuel buses) | 28% | 18% |
| Ambulances (factory fitted) | 28% | 18% |
| Motor vehicles for goods transport (excl. refrigerated vehicles) | 28% | 18% |
| Tanks and other armoured fighting vehicles (motorised) | 12% | 5% |
| Bicycles and other non-motorised cycles | 12% | 5% |
| Unmanned aircraft | 28%/18% | 5% |
| Rowing boats and canoes | 28% | 18% |
| Hand-propelled/animal-drawn vehicles (e.g., handcarts, rickshaws) | 12% | 5% |
This restructuring curbs luxury indulgence with higher taxes while promoting non-motorised and military-grade transport efficiency with lower slabs.
Suggested read: Impact of GST 2.0 on Fuel
New GST Rates on Luxury Vehicles
Luxury vehicles and high-end personal transport items now fall under a higher GST bracket, reflecting their premium and non-essential nature.
Here is a complete list of the impact of GST 2.0 on luxury automobiles:
| Goods Type | Old GST | New GST |
|---|---|---|
| Large cars & racing cars | 28% | 40% |
| Hybrid cars (large/diesel) | 28% | 40% |
| Motorcycles > 350cc | 28% | 40% |
| Personal aircraft | 28% | 40% |
| Yachts & pleasure vessels | 28% | 40% |
This higher slab aims to promote affordability in essential transport while keeping luxury consumption taxed at a premium.
0
Bad
Check your Credit Score for Free
Your credit score is updated monthly and gives you insight into your creditworthiness. Take control of your financial future today.
How GST 2.0 Impacts Vehicle Part Rates
GST 2.0 introduces a uniform tax rate for most auto parts, simplifying billing and reducing cascading costs in vehicle maintenance.
Here is a table to show the overall impact of GST 2.0 on automobile parts
| Goods Name and Type | Old GST | New GST |
|---|---|---|
| All auto parts (uniform rate) | 28% | 18% |
| New pneumatic tyres (other than bicycle/rickshaw/aircraft/rear tractor) | 28% | 18% |
| Parts & accessories of motor vehicles (headings 8701-8705, excl. tractor parts) | 28% | 18% |
| Parts & accessories of motorcycles (heading 8711) | 28% | 18% |
| Spark-ignition reciprocating/rotary internal combustion piston engines (excl. aircraft) | 28% | 18% |
| Compression-ignition internal combustion piston engines (diesel/semi-diesel) | 28% | 18% |
| Parts for engines (headings 8407 or 8408) | 28% | 18% |
| Fuel/lubricant dispensing pumps (filling stations/garages); fuel/lubricating/cooling medium pumps for internal combustion engines | 28% | 18% |
| Electric accumulators (excl. Lithium-ion batteries/power banks) | 28% | 18% |
| Electrical ignition/starting equipment (magnetos, coils, plugs, starter motors, generators) | 28% | 18% |
| Seats for motor vehicles | 28% | 18% |
| Vehicle bodies (incl. cabs, for headings 8701-8705) | 28% | 18% |
| Chassis fitted with engines (for vehicles of headings 8701-8705) | 28% | 18% |
| Parts & accessories of bicycles/non-motorised cycles | 12% | 5% |
This benefits mechanics, garages, and aftermarket service providers, while giving vehicle owners long-term savings on repairs and spares.
Read also: Impact of GST 2.0 on Daily Essentials
Personal Loan
Quick Approval in 24 Hours
💰 No processing fee for first 100 customers | ⚡ Digital KYC in 5 minutes
GST 2.0 Impact on Machinery
Agricultural and industrial machinery like tractors, balers, diesel engines, and pumps will see a generous GST cut to energise core sectors.
Here is a table explaining the impact of GST 2.0 on machinery:
| Goods Name and Type | Old GST | New GST |
|---|---|---|
| Tractors (most types, excl. road tractors for semi-trailers > 1800 cc) | 12% | 5% |
| Agricultural machinery for soil preparation/cultivation | 12% | 5% |
| Harvesting/threshing machinery, balers, mowers | 12% | 5% |
| Composting machines | 12% | 5% |
| Fixed-Speed Diesel Engines (power ≤ 15 HP) | 12% | 5% |
| Agricultural Diesel Engine (cylinder capacity > 250 cc for Tractor) | 12% | 5% |
| Rear tractor tyres and tubes | 18% | 5% |
| Tyre for tractors | 12% | 5% |
| Tube for tractor tyres | 12% | 5% |
| Hydraulic Pumps for Tractors | 12% | 5% |
| Tractor parts (wheel rim, centre housing, transmission, front axle support) | 12% | 5% |
| Bumpers and parts for tractors | 12% | 5% |
| Brake assembly and parts for tractors | 12% | 5% |
| Gearboxes and parts for tractors | 12% | 5% |
| Transaxles and parts for tractors | 12% | 5% |
| Road wheels and parts for tractors | 12% | 5% |
| Radiator assembly and cooling system for tractors | 12% | 5% |
| Silencer assembly and parts for tractors | 12% | 5% |
| Clutch assembly and parts for tractors | 12% | 5% |
| Steering wheels and parts for tractors | 12% | 5% |
| Hydraulic and its parts for tractors | 12% | 5% |
| Fender, Hood, wrapper, Grill, Side Panel, Extension Plates, Fuel Tank and parts for tractors | 12% | 5% |
| Self-loading/unloading trailers for agricultural purposes | 12% | 5% |
Farmers, agri-equipment manufacturers, and MSMEs in machinery-based industries stand to gain from reduced costs, enabling higher productivity and lower capital barriers. For MSMEs and manufacturers, the rates can be calculated using a GST calculator to get a better idea of how these changes will impact your expenses.
Final Thoughts
The latest GST council meeting has done more than simplify taxation; it has rewritten affordability for every kind of vehicle user in India.
The impact of GST 2.0 on automobiles and their components is particularly pronounced in this iteration. The focus is on making life easier for the middle class and the ones on the lower end of the tax bracket.
That means if you have been eyeing that bike or car recently, your best chance to pounce upon it is after September 22. If finances are holding you back and you are in search of loan options, this might be the right option to check out a two-wheeler loan or a car loan.
But before you jump in, be wise and use an EMI calculator to know your repayment. Be safe while lending; be wary of repayment dates.
Download the Buddy Loan app now!
Get the free Buddy Loan app on your phone
