“Your next car could cost ₹4 lakh less—thanks to GST 2.0!”
From September 22, 2025, the Indian government implements GST 2.0, rationalising GST on automobiles. Buyers of new cars will see effective tax rates drop by 10–15 percentage points, slashing prices across popular petrol, diesel, and CNG models. Combined with festive-season offers, this presents one of the biggest affordability boosts in years. Here’s an in-depth breakdown of GST 2.0, model-wise savings, before/after pricing, buyer personas who benefit most, expert insights, and tips on maximizing value.
Table of Contents
Quick Savings at a Glance
| Model | Old Price (₹ Lakh) | New Price (₹ Lakh) | Savings (₹ Lakh) |
|---|---|---|---|
| Kia Seltos | 11.00 – 18.00 | 10.33 – 16.72 | 0.67 – 1.28 |
| Kia Sonet | 7.30 – 12.50 | 6.85 – 11.74 | 0.45 – 0.76 |
| Mahindra XUV700 | 14.00 – 23.00 | 12.44 – 21.44 | 1.56 |
| MG Hector | 14.50 – 20.00 | 13.49 – 18.64 | 1.01 – 1.36 |
| Hyundai Creta | 10.50 – 18.00 | 9.98 – 16.20 | 0.52 – 1.80 |
| Maruti Brezza | 7.40 – 13.00 | 7.03 – 11.65 | 0.37 – 1.35 |
| Tata Nexon | 8.00 – 15.00 | 7.60 – 13.20 | 0.40 – 1.80 |
| Toyota Urban Cruiser Hyry | 9.00 – 12.50 | 8.55 – 11.25 | 0.45 – 1.25 |
Introduction
For years, car prices in India included a hefty 28% GST plus cess, keeping popular SUVs and sedans out of reach for budget buyers. With GST 2.0, base GST on all passenger vehicles drops to 18% and cess caps at 12%, bringing net tax rates down to 30% or lower from up to 50%. Effective savings range from 5% on entry-level models to over 10% on premium SUVs. The change coincides with the festive season, when manufacturer discounts and bank offers further slash EMIs and on-road costs. For aspiring car buyers, this is the perfect time to upgrade.
Understanding GST 2.0 Changes
Old vs New Tax Structure
- Current regime: 28% base GST on vehicles above ₹10 lakh + cess up to 22%
- New regime: 18% base GST + maximum 12% cess on all passenger vehicles
- Effective reduction: 10–15 percentage points, translating to direct price cuts per lakh
Why It Matters
- Reduces upfront cost and EMIs by hundreds to thousands per month
- Encourages buyers toward higher variants with more features
- Benefits environment-friendly models equally—EVs remain at 5% GST
Brand & Segment Impacts
Compact SUVs
- Kia Sonet & Maruti Brezza:
- Savings of ₹45k–76k (Sonet) and ₹37k–1.35L (Brezza)
- Buyers can upgrade from base to mid-variant affordably
Mid-Size SUVs
- Hyundai Creta & Kia Seltos:
- Creta savings up to ₹1.80L on top SX(O) trim
- Seltos savings of ₹67k–1.28L enable GT and TechLine variants
Premium SUVs
- Mahindra XUV700 & MG Hector:
- XUV700 sees flat ₹1.56L reduction
- Hector offers ₹1.01–1.36L savings
Entry Sedans & Hatchbacks
- Tata Tiago, Honda Amaze, Maruti Swift:
- Smaller models also see tax cuts—Tiago up to ₹25k, Amaze ₹35k
Model-Wise Price Comparisons
Hyundai Creta SX(O) Diesel
| Before (₹ Lakh) | After (₹ Lakh) | Savings (₹ Lakh) |
|---|---|---|
| 18.00 | 16.20 | 1.80 |
EMI Impact: On a ₹16L loan over 5 years, EMI reduces by ~₹3,200/month.
Tata Nexon XZ+ Petrol
| Before (₹ Lakh) | After (₹ Lakh) | Savings (₹ Lakh) |
|---|---|---|
| 11.00 | 10.60 | 0.40 |
Festive Offers: Combine ₹40k GST cut with ₹20k bank cashback.
MG Hector Sharp DCT
| Before (₹ Lakh) | After (₹ Lakh) | Savings (₹ Lakh) |
|---|---|---|
| 20.00 | 18.64 | 1.36 |
Value Gain: Upgrade to Panoramic Sunroof variant at no extra cost post-GST cut.
Buyer Personas: Who Benefits the Most?
- First-Time Buyers: Entry-level hatchbacks (Swift, Tiago) now closer to hatch prices—ideal for city starter cars.
- Budget-Conscious Families: Compact SUVs like the Brezza and Creta deliver space and safety with lower running costs, fitting household budgets perfectly.
- Upgraders: Mid-range SUVs are now within reach—Creta and Seltos top trims with sunroofs and ADAS are suddenly affordable.
- Fleet Operators & Taxi Services: Bulk purchases of CNG sedans and hatchbacks benefit from cumulative savings, lowering overall fleet costs.
- Luxury Seekers: Premium SUVs (XUV700, Hector) now slightly more affordable, enabling feature-loaded variants for aspirational buyers.
Social Proof & Expert Quotes
“GST 2.0 will drive a 15–20% spike in festive bookings, especially for SUVs,” says Ramesh Iyer, Senior Dealer Principal at AutoXpress Delhi.
“Buyers can now justify choosing premium variants—sunroof, safety tech—without the premium price tag,” notes market analyst Priya Rao of CarMonitor Insights.
Buyer-Centric Benefits
- Feature Upgrades
- Step up to higher trims—sunroof, leather seats, safety tech—for the same budget.
- EMI Relief
- Lower principal means EMIs drop by ₹2,000–₹4,000 monthly, easing finance strain.
- Resale Advantage
- Late-2025 models command better premiums as buyers prefer updated GST-2.0-priced cars.
- Flexible Budgeting
- Hatchbacks vs SUVs price gap narrows; multi-car households can reconsider family SUVs.
Dealership & Manufacturer Moves
- Price Updates: Showrooms updated lists by Sept 10—view at Hyundai, Maruti, Tata.
- Festive Campaigns: “GST 2.0 Advantage” taglines, bank tie-ups, zero down-payment schemes.
- Accessory Bundles: Free accessories (floor mats, roof rails) to sweeten the offer.
Maximizing Your Savings
- Time Your Purchase: Book by Sept 22 to lock in rates.
- Target Mid-Variants: High-end features for minimal incremental cost.
- Leverage Exchanges: Combine GST cuts with old car exchanges.
- Smart Financing: Lower loan amount reduces total interest outgo significantly.
FAQs
When does GST 2.0 on cars start?
From September 22, 2025
Are CNG models included?
Yes, CNG variants also see GST cuts to 18% base + capped cess.
Can I combine GST savings with other discounts?
Yes, manufacturer and dealer offers stack on top of GST 2.0 savings.
How much will my EMI drop on a ₹20 lakh loan?
EMI reduces by ~₹3,000–₹4,000/month over a 5-year tenure.
Are EVs affected?
EVs already have 5% GST; no change, but they benefit from overall market shift.
Conclusion
If you’ve been waiting to buy, GST 2.0 + festive discounts = the lowest prices in years. Don’t wait till December—book early to grab your savings! Delays could mean waiting until 2026 for a similar price advantage—don’t miss this window.
👉 Vote: Which car will you buy with GST 2.0 savings? Let us know below!
Prajakta specializes in automotive news, industry updates, and easy-to-follow guides. At AutoNewsWala, she covers everything from GST reforms and policy changes to car and bike maintenance tips. Her goal is to keep readers informed with accurate, timely, and useful updates from the fast-changing automobile industry.
