Want to buy a Scorpio, XUV, Fortuner, Innova, Ertiga, Kia Carens or Triber? GST changes explained

A 40% Goods and Services Tax (GST) on big cars sounds like bad news for buyers of big cars like Sports Utility Vehicles (SUV), Multi Utility Vehicles (MUV), Multi-purpose Vehicles (MPV) or Cross-Over Utility Vehicles (XUV).

But the truth is that it might be an opportune time for buyers, who want to change their cars. And what best could it be with the start of Navratri. As part of its 2025 tax overhaul, the GST Council introduced a simplified structure, putting high-end vehicles under a flat 40% tax slab.

While this sounds like a price hike, it actually replaces a more complicated system of GST plus compensation cess that pushed effective taxes even higher 50%.

Will automakers pass this benefit to the consumers? We will have to wait and watch till September 22 when the new GST rates kick in.

"This timely move is set to bring renewed cheer to consumers and inject fresh momentum into the Indian Automotive sector. Making vehicles more affordable, particularly in the entry-level segment; these announcements will significantly benefit first-time buyers and middle-income families, enabling broader access to personal mobility," said Shailesh Chandra, President, SIAM.

Here is a quick overview of popular models across segments from budget-friendly MPVs to premium SUVs along with their starting ex-showroom prices

Mahindra Scorpio: Starting at ₹13.77 lakh

Toyota Fortuner: Starts from ₹36.05 lakh

Mahindra XUV500 (Facelift): Priced between ₹12.32 lakh and ₹18.98 lakh

Toyota Innova Crysta: Starting at ₹19.99 lakh

Maruti Suzuki Ertiga: Ranges between ₹8.69 lakh and ₹9.20 lakh (base variants)

Kia Carens: Starts at around ₹11.41 lakh

Renault Triber: Entry price of approximately ₹6.30 lakh

GST applies only to the ex-showroom price. Registration fees, insurance, and road tax are charged separately by the state.

Please note that above-mentioned prices are expected to change after the implementation of the new GST rate.

GST on cars: What is changing from September 22?

The GST Council has restructured the tax system for the auto sector:

Small cars and two-wheelers (under 1,200cc petrol or 1,500cc diesel, and bikes under 350cc): GST cut from 28% to 18%.

Currently, mid-size and big cars attract 28% GST and compensation cess ranging from 17-22% with the overall tax incidence ranging from 45-50%.

The new GST rate on mid-size and big cars will be 40% with no compensation cess.

The GST rate on all mid-size and large cars i.e. vehicles exceeding 1500 cc or length exceeding 4000mm is 40%.

Further, motor vehicles in the category of Utility Vehicles, by whatever name called including SUV, MUV, MPV or XUV, with an engine capacity exceeding 1500 cc, length exceeding 4000 mm, and ground clearance of 170 mm and above, will also attract a GST rate of 40% without any cess.

The GST rate on all small cars has been reduced from 28% to 18%. For the purposes of GST, small cars means Petrol, LPG, or CNG cars with engine capacity up to 1200 cc and length up to 4000 mm and Diesel cars with engine capacity up to 1500 cc and length up to 4000 mm.

“For the automobile sector, the move is transformative. The GST reduction on the entry level car segment (petrol below 1200 cc and diesel below 1500 cc) from 28% to 18%, and a uniform rate for auto components at 18%, make personal mobility significantly more affordable for the masses," said Venkatram Mamillapalle, Managing Director, Renault India.