Thinking of buying a car or two-wheeler this festive season? You might want to wait a little longer.
A proposed Goods and Services Tax (GST) overhaul is on the horizon, which could dramatically lower the prices of vehicles, making them much more affordable. According to a report from Nomura, a government panel has endorsed a new two-slab GST structure: 5% for essential goods and 18% for standard items.
This change could be a game-changer for car buyers. Here’s what it means for you:
Major Price and EMI Reductions
If the new structure is approved, the GST on small cars and two-wheelers could drop from 28% to 18%. Even larger vehicles may see a reduction from their current 43–50% tax bracket down to 40%.
This isn’t just about a small discount—it could lead to significant savings. Some popular car models could see a price drop of up to ₹1.4 lakh, which could lower your monthly EMI by over ₹2,000. Two-wheelers would also get cheaper; for example, a Honda Activa could save you ₹7,452, cutting your EMI by around ₹122. Royal Enfield Classic buyers might save close to ₹18,000.
Potential Savings by Model
The following table shows the estimated savings for a range of popular vehicles:
| Model | Old On-Road Price (₹) | New On-Road Price (₹) | Price Drop (₹) | Old EMI (₹) | New EMI (₹) | EMI Drop (₹) |
| Cars | ||||||
| Wagon R | 748,228 | 684,426 | 63,802 | 12,281 | 11,234 | 1,047 |
| Baleno | 890,566 | 814,626 | 75,940 | 14,617 | 13,371 | 1,246 |
| Dzire | 945,500 | 864,876 | 80,624 | 15,519 | 14,195 | 1,323 |
| Bolero Neo | 1,390,131 | 1,252,179 | 137,952 | 22,817 | 20,552 | 2,264 |
| Brezza | 1,156,229 | 1,116,359 | 39,870 | 18,977 | 18,323 | 654 |
| Creta | 1,611,957 | 1,556,372 | 55,585 | 26,457 | 25,545 | 912 |
| XUV7OO | 2,181,345 | 2,063,434 | 117,911 | 35,803 | 33,868 | 1,935 |
| Two-wheelers | ||||||
| Activa | 95,385 | 87,933 | 7,452 | 1,566 | 1,443 | 122 |
| Classic 350 | 226,613 | 208,909 | 17,704 | 3,719 | 3,429 | 291 |
A Boost for the Auto Industry
These GST cuts aren’t just great news for buyers—they could also give the auto sector a much-needed push. Nomura projects a 5-10% jump in demand this year if the cuts go through.
While these changes would make vehicle ownership more accessible, especially for higher-end models and SUVs, don’t expect a sudden rush toward the most basic, entry-level vehicles. Consumer preferences have shifted toward stylish, feature-rich cars, and this trend is likely to continue.
The proposal is expected to be finalized soon, potentially making your festive season car purchase a lot more affordable.