Buying a car? GST cut may drop prices by ₹1.4 lakh and your EMI by ₹2,000
Two-wheelers aren't left behind. Honda Activa could get cheaper by ₹7,452, cutting your EMI by about ₹122. Royal Enfield Classic buyers may save close to ₹18,000 upfront.
- Aug 23, 2025,
- Updated Aug 23, 2025 10:54 AM IST
Thinking of buying a car this festive season? You might want to hold off just a little longer. A Goods and Services Tax (GST) overhaul, likely to be approved soon, could significantly cut the prices of popular cars and two-wheelers, making vehicle ownership substantially more affordable.
According to a report from Nomura, the government’s Group of Ministers (GoM) has backed a two-slab GST structure—5% for essential goods and 18% for standard items. This revamp could drop GST on small cars and two-wheelers from 28% to 18%, while larger vehicles may see a reduction from 43–50% to 40%.
The direct result? Car prices could dip by as much as ₹1.4 lakh, and EMIs might shrink by over ₹2,000 a month.
Here’s how it affects you as a buyer:
Imagine you’re planning to buy a Maruti Wagon R. Its current on-road price of ₹7.48 lakh could drop to ₹6.84 lakh. Monthly EMIs may go down by ₹1,047. Models like the Brezza or Hyundai Creta—both in the higher GST bracket—would also see moderate price cuts and smaller monthly savings.
Two-wheelers aren't left behind. Honda Activa could get cheaper by ₹7,452, cutting your EMI by about ₹122. Royal Enfield Classic buyers may save close to ₹18,000 upfront.
| Wagon R | 748,228 | 684,426 | 63,802 | 12,281 | 11,234 | 1,047 |
| Baleno | 890,566 | 814,626 | 75,940 | 14,617 | 13,371 | 1,246 |
| Dzire | 945,500 | 864,876 | 80,624 | 15,519 | 14,195 | 1,323 |
| Bolero Neo | 1,390,131 | 1,252,179 | 137,952 | 22,817 | 20,552 | 2,264 |
| Brezza | 1,156,229 | 1,116,359 | 39,870 | 18,977 | 18,323 | 654 |
| Creta | 1,611,957 | 1,556,372 | 55,585 | 26,457 | 25,545 | 912 |
| XUV7OO | 2,181,345 | 2,063,434 | 117,911 | 35,803 | 33,868 | 1,935 |
| Activa | 95,385 | 87,933 | 7,452 | 1,566 | 1,443 | 122 |
| Classic 350 | 226,613 | 208,909 | 17,704 | 3,719 | 3,429 | 291 |
This isn’t just about savings. These cuts could trigger a surge in festive demand, which the auto sector desperately needs. Nomura expects a 5–10% jump in demand this year if the GST cuts go through.
Buyers inclined toward higher-end models and SUVs may benefit most, given that affordability has been a barrier in these segments.
However, don’t expect a flood of buyers back into the ultra-low entry segment—consumer preferences have moved toward feature-packed, stylish vehicles.
Thinking of buying a car this festive season? You might want to hold off just a little longer. A Goods and Services Tax (GST) overhaul, likely to be approved soon, could significantly cut the prices of popular cars and two-wheelers, making vehicle ownership substantially more affordable.
According to a report from Nomura, the government’s Group of Ministers (GoM) has backed a two-slab GST structure—5% for essential goods and 18% for standard items. This revamp could drop GST on small cars and two-wheelers from 28% to 18%, while larger vehicles may see a reduction from 43–50% to 40%.
The direct result? Car prices could dip by as much as ₹1.4 lakh, and EMIs might shrink by over ₹2,000 a month.
Here’s how it affects you as a buyer:
Imagine you’re planning to buy a Maruti Wagon R. Its current on-road price of ₹7.48 lakh could drop to ₹6.84 lakh. Monthly EMIs may go down by ₹1,047. Models like the Brezza or Hyundai Creta—both in the higher GST bracket—would also see moderate price cuts and smaller monthly savings.
Two-wheelers aren't left behind. Honda Activa could get cheaper by ₹7,452, cutting your EMI by about ₹122. Royal Enfield Classic buyers may save close to ₹18,000 upfront.
| Wagon R | 748,228 | 684,426 | 63,802 | 12,281 | 11,234 | 1,047 |
| Baleno | 890,566 | 814,626 | 75,940 | 14,617 | 13,371 | 1,246 |
| Dzire | 945,500 | 864,876 | 80,624 | 15,519 | 14,195 | 1,323 |
| Bolero Neo | 1,390,131 | 1,252,179 | 137,952 | 22,817 | 20,552 | 2,264 |
| Brezza | 1,156,229 | 1,116,359 | 39,870 | 18,977 | 18,323 | 654 |
| Creta | 1,611,957 | 1,556,372 | 55,585 | 26,457 | 25,545 | 912 |
| XUV7OO | 2,181,345 | 2,063,434 | 117,911 | 35,803 | 33,868 | 1,935 |
| Activa | 95,385 | 87,933 | 7,452 | 1,566 | 1,443 | 122 |
| Classic 350 | 226,613 | 208,909 | 17,704 | 3,719 | 3,429 | 291 |
This isn’t just about savings. These cuts could trigger a surge in festive demand, which the auto sector desperately needs. Nomura expects a 5–10% jump in demand this year if the GST cuts go through.
Buyers inclined toward higher-end models and SUVs may benefit most, given that affordability has been a barrier in these segments.
However, don’t expect a flood of buyers back into the ultra-low entry segment—consumer preferences have moved toward feature-packed, stylish vehicles.