What is the new GST rate on small cars in India (2025)?

As of September 22, 2025, small cars (petrol up to 1200cc, diesel up to 1500cc, and under 4 metres) are taxed at 18% GST, down from 28% plus a 1-3% cess.

How much did small car prices drop after the GST cut?

Popular small cars became cheaper by ₹50,000 to ₹1.05 lakh. For example, the Maruti Swift dropped by ₹88,000 and the Tata Nexon by ₹1.05 lakh.

Which small cars are most popular after the GST reduction?

Cars like the Tata Punch, Maruti Swift, Baleno, Kia Sonet, Tata Nexon, and Hyundai Exter have seen a surge in demand after the GST cut.

Does the GST cut affect road tax and insurance?

Yes. Since both road tax and insurance are calculated on ex-showroom prices, the GST cut reduces the overall cost of ownership for small cars.

Is this the best time to buy a car in India?

Yes, 2025’s GST cut combined with festive season discounts makes it the best time in years to buy popular hatchbacks and compact SUVs.

Automobile

GST Cut in September 2025 Boosts Small Car Sales in India: Price Drop, Savings & Best Models

ByShubham Singh September 29, 2025September 29, 2025

India’s recent GST Cut on Small Cars in 2025 has created a wave in the automobile market. With GST on small cars reduced from 28% to 18%, prices of hatchbacks and compact SUVs have dropped significantly, sparking record demand just ahead of the festive season. Maruti Suzuki witnessed a historic sales of approximately 30000 units of cars sold in a single day on September 22, 2025.

What Changed? GST Reform Explained

At the 56th GST Council Meeting, the government introduced major changes:

Small Cars (Petrol ≤ 1200cc, Diesel ≤ 1500cc, ≤4m length): GST reduced from 28% + cess (29–31%) to a flat 18%.
Large Cars & SUVs: Simplified to a flat 40% GST.
Electric Vehicles (EVs): Continue at 5% GST to push green mobility.

This directly slashed ex-showroom prices, making cars cheaper across on-road costs like insurance, road tax, and EMIs.

GST Cut on Small Cars Prices Dropped

Model	Old Price*	New Price*	Savings
Maruti Swift	₹6.80 lakh	₹5.92 lakh	₹88,000
Tata Nexon	₹8.50 lakh	₹7.45 lakh	₹1,05,000
Maruti Baleno	₹6.70 lakh	₹5.85 lakh	₹85,000
Mahindra XUV 3XO	₹8.90 lakh	₹7.95 lakh	₹95,000
Hyundai Venue	₹7.94 lakh	₹7.15 lakh	₹79,400
Tata Tiago	₹5.50 lakh	₹5.00 lakh	₹50,000
Kia Sonet	₹8.60 lakh	₹7.70 lakh	₹90,000
Tata Altroz	₹7.20 lakh	₹6.38 lakh	₹82,000
Hyundai i20	₹7.50 lakh	₹6.75 lakh	₹75,000
Honda Amaze	₹7.10 lakh	₹6.25 lakh	₹85,000

*Ex-showroom Delhi, base petrol/diesel variants. Prices may vary.

Best-Selling Cars After GST Cut

Tata Punch: Now from ₹5.50 lakh, top choice for first-time buyers.
Maruti Swift & Baleno: Hatchbacks with the steepest price cuts, selling out fast.
Kia Sonet & Hyundai Exter: Compact SUVs now more affordable, fueling high bookings.
Mahindra XUV 3XO & Tata Nexon: Nearly ₹1 lakh cheaper, boosting SUV sales.
Renault Kiger & Maruti Fronx: Popular urban crossovers gain fresh traction.
Tata Tiago & Hyundai i10: Entry-level hatchbacks revive sub-₹5 lakh demand.

Click on the above links to know the on-road prices and more

Maruti Suzuki and Hyundai report 4x bookings within days of the GST revision, with Swift, Punch, Exter, and Baleno leading.

Why Are Buyers Rushing In?

Lower Ownership Cost: Cheaper EMIs, insurance, and road tax.
Affordable Entry-Level Cars: Hatchbacks back under ₹4–5 lakh.
Festive Deals + GST Cuts: Best offers since 2020.
First-Time Buyers Return: Youth and small families finally see cars within budget again.

Conclusion

The GST Cut on Small Cars in 2025 has revived India’s small car market, making hatchbacks and compact SUVs more affordable than ever. If you’ve been waiting for the right time, this festive season is your best chance to grab a Maruti Swift, Tata Punch, Hyundai Exter, or Kia Sonet at unbeatable prices.