GST Tax on Cars in India 2026 – GST 2.0 Rates, Slabs & Comparison with Pre-2026

GST tax on cars in India was revised under GST 2.0 effective April 1, 2026, bringing significant relief to buyers of sub-compact SUVs and small cars. The sub-compact SUV segment — India's most popular vehicle category — saw GST drop from 28% to 18%, saving buyers ₹1-3 lakh per vehicle. Small cars were reduced from 6% to 5%, saving ₹10-20,000 per vehicle.

GST on cars ranges from 5% (small cars and EVs) to 28% (large SUVs and luxury vehicles), making it the single largest component of the vehicle's total tax burden. This guide explains the current GST structure, what changed under GST 2.0, and how it compares to the pre-April 2026 rates.

GST 2.0: April 2026 Changes

Small cars (under 4m, petrol under 1200cc): reduced from 6% to 5%. Sub-compact SUVs: reduced from 28% to 18% — the biggest single change. Large SUVs (above ₹15 lakh): unchanged at 28%. Electric vehicles: unchanged at 5%.

Who Benefits Most from GST 2.0?

The ₹10-20 lakh sub-compact SUV segment benefits most. A ₹12 lakh sub-compact SUV saves ₹1,20,000 in GST alone. This, combined with 5-8% road tax in most states, makes the on-road price ₹1.5-2 lakh lower than pre-April 2026.

What are the current GST rates on cars in India?

GST 2.0 rates (April 2026): small cars (under 4m) at 5%, sub-compact SUVs at 18%, large SUVs above ₹15 lakh at 28%, and all electric vehicles at 5%. GST is applied by the manufacturer and included in the ex-showroom price.

What changed in GST 2.0 for cars?

GST 2.0 (effective April 1, 2026): small cars reduced from 6% to 5% (saving ₹10-20K), sub-compact SUVs reduced from 28% to 18% (saving ₹1-3 lakh), large SUVs unchanged at 28%, EVs unchanged at 5%.

Is GST different for SUVs vs sedans?

GST is based on vehicle type and ex-showroom price bracket, not body style. A sub-compact SUV and a mid-size sedan in the same price range attract the same GST. However, most sub-compact SUVs fall in the 18% bracket while large luxury sedans may fall in the 28% bracket.

How is GST calculated on a new car?

GST = Ex-showroom price × GST rate. For a ₹10 lakh car with 18% GST: GST = ₹1,80,000. The ex-showroom price you pay to the dealer already includes GST — it is not added separately.

Do commercial vehicles have different GST rates?

Commercial vehicles (buses, trucks) have their own GST schedule, typically 12-18% or lower. For passenger vehicles, the 5-28% bracket applies based on size and engine capacity. GST rates are set by the GST Council.

Official Resources: Parivahan Portal | India GST Portal | NHAI