Thinking of buying a car or two-wheeler this festive season? You might want to wait a little longer.
Thank you for reading this post, don't forget to subscribe!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.
