Buying a car? GST cut may drop prices by ₹1.4 lakh and your EMI by ₹2,000

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.

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.