'Buy one car, give one to govt': CA breaks down why GST rejig still misses India's middle class
Beyond GST, Gupta pointed to additional expenses: fuel, tolls, and state road taxes that range from 5% to 21%. If states raise these further, the GST benefit could vanish.
- Aug 20, 2025,
- Updated Aug 20, 2025 3:02 PM IST
The government’s proposal to revise GST rates on cars promises relief across segments but for many middle-class Indians, the math still stings. As one chartered accountant put it: buy one car, give one to the government.
In a LinkedIn post, CA Kapil Gupta broke down the proposed tax changes. Under the new structure, GST on small cars is expected to drop from 29% to 18%. Mid-size cars and SUVs, previously taxed at 43% and 50%, would probably move to a flat 40%.
The reduction for small cars could ease entry-level pricing, Gupta noted, but the cut for mid-size and larger vehicles is marginal, especially for those already burdened by high income taxes and living costs.
“For a person earning just above ₹24 lakh a year, already paying 31% income tax, high GST on almost every product, expensive private education and medical costs… buying a mid-size SUV still feels like paying one car to the government first and then keeping one for yourself,” Gupta wrote.
Beyond GST, Gupta pointed to additional expenses: fuel, tolls, and state road taxes that range from 5% to 21%. If states raise these further, the GST benefit could vanish.
“The net gain for the buyer may be purely theoretical,” he warned.
He also questioned the rationale behind taxing mid-size cars and SUVs as luxury items, noting that for larger families, such vehicles are often a necessity, not an indulgence.
The policy shift comes amid trade agreements that are expected to ease market entry for foreign automakers. While this could benefit manufacturers, Gupta argued the average Indian buyer sees little structural change.
“The industry may gain with this reform,” he wrote, “but for the middle class, real relief is still missing.”
The government’s proposal to revise GST rates on cars promises relief across segments but for many middle-class Indians, the math still stings. As one chartered accountant put it: buy one car, give one to the government.
In a LinkedIn post, CA Kapil Gupta broke down the proposed tax changes. Under the new structure, GST on small cars is expected to drop from 29% to 18%. Mid-size cars and SUVs, previously taxed at 43% and 50%, would probably move to a flat 40%.
The reduction for small cars could ease entry-level pricing, Gupta noted, but the cut for mid-size and larger vehicles is marginal, especially for those already burdened by high income taxes and living costs.
“For a person earning just above ₹24 lakh a year, already paying 31% income tax, high GST on almost every product, expensive private education and medical costs… buying a mid-size SUV still feels like paying one car to the government first and then keeping one for yourself,” Gupta wrote.
Beyond GST, Gupta pointed to additional expenses: fuel, tolls, and state road taxes that range from 5% to 21%. If states raise these further, the GST benefit could vanish.
“The net gain for the buyer may be purely theoretical,” he warned.
He also questioned the rationale behind taxing mid-size cars and SUVs as luxury items, noting that for larger families, such vehicles are often a necessity, not an indulgence.
The policy shift comes amid trade agreements that are expected to ease market entry for foreign automakers. While this could benefit manufacturers, Gupta argued the average Indian buyer sees little structural change.
“The industry may gain with this reform,” he wrote, “but for the middle class, real relief is still missing.”