• By Kanika Sachdeva
  • Wed, 20 Aug 2025 03:35 PM (IST)
  • Source:JND

GST Rate Cut: Prime Minister Narendra Modi's 103-minute Independence Day 2025 televised speech outlined several economic and security initiatives, including the next generation of GST (Goods and Services Tax) Reforms, indicating a reduction in rates on essential goods and streamlining tax slabs to benefit the middle class and small businesses. As for India's auto sector, Modi announced a Diwali Bonanza of GST reform.

While the official announcement is some time away, the Indian government will reportedly slash taxes on small cars (sub-4m) from 28 to 18 per cent, potentially bringing down the prices of small, mass-market petrol and diesel cars, such as the Maruti Suzuki Swift, Alto K10, Hyundai Exter, and the Tata Tiago. 

GST Rate Cut: Who Could Benefit from the Reform?

Big OEMs like Maruti Suzuki, Tata, and Hyundai capitalise on cars with sub-1,200cc engines, which need to comply with the tougher emission norms. This, coupled with an enhanced safety suite and better tech, raises the prices of cars – a cause of considerable concern for both buyers and OEMs alike. Reasons? Buyers rely on manufacturers to make small cars more affordable, while manufacturers are worried about their sales and the growth rate of the car industry. 

Also Read: Govt To Slash GST Rates; Small Cars, Two Wheelers To Become More Affordable: Report

GST Rate Cut: Expected Prices of Swift, Tiago

If the proposed GST rate cut is implemented, small cars that currently face a 28 per cent GST levy could see a drop to an 18 per cent rate. However, there will be other potential levies, like a 1 per cent cess.

For context, Maruti Suzuki currently retails its Swift hatchback at a starting price of Rs 6.49 lakh (ex-showroom). This price is exclusive of 28 per cent GST and 1 per cent cess. In contrast to its current price range of Rs 8.37 lakh – Rs 12.25 lakh (price calculated after taking into account 28 per cent GST and 1 per cent cess), the Swift could be available at a starting price of Rs 7.72 lakh (price calculated after taking into account 18 per cent GST and 1 per cent cess), post the likely GST rate cut.

Also Read: Want Ethanol-Free Petrol For Your Vehicle? Indian Oil Comes Up With A Solution

Similarly, the Tata Tiago – which is currently available at a starting price of Rs 6.45 lakh (calculated after 28 per cent GST and 1 per cent cess) – could be priced from Rs 5.95 lakh (calculated after 18 per cent GST and 1 per cent cess).

Moreover, it is also believed that cars with bigger displacements could invite a special rate of 40 per cent, which will also likely bring tobacco and online gaming under the ambit.