GST gets a makeover: TVs, ACs, small cars and bikes now drive into the 18 percent lane

The GST Council’s latest decision is set to bring a wave of relief to Indian consumers just in time for the festive season. In a landmark move, the Council has slashed the Goods and Services Tax on several popular consumer items—from small cars and commuter bikes to air conditioners and televisions—bringing them under the 18 percent slab. This marks a significant drop from the previous 28 percent rate and is expected to make these products substantially more affordable.

Here’s a comprehensive breakdown of what this means for buyers, manufacturers, and the broader economy.

Key highlights of the GST revision

1. GST on small cars, two-wheelers under 350cc, ACs, TVs above 32 inches, and dishwashers has been reduced from 28 percent to 18 percent  
2. The new rates will be effective from September 22, 2025, coinciding with the first day of Navaratri  
3. The move is aimed at boosting consumption, easing inflationary pressure, and supporting the automotive and consumer electronics sectors  

What gets cheaper and why it matters

The revised GST rates apply to a wide range of products that are staples in middle-class households and popular among first-time buyers. Here’s what’s included:

- Small cars: Petrol vehicles up to 1200cc and diesel vehicles up to 1500cc, with a maximum length of 4000mm. Models like Maruti Dzire, Hyundai i10, and Tata Punch fall into this category  
- Motorcycles and scooters: Two-wheelers with engine capacities up to 350cc, including popular models from TVS, Honda, and Royal Enfield  
- Consumer electronics: Air conditioners, televisions above 32 inches, and dishwashers from brands like LG, Samsung, and Voltas  

This tax cut is expected to reduce the overall cost of these products by 8 to 10 percent, depending on the brand and model. Manufacturers have already begun recalibrating their pricing strategies to pass on the benefits to consumers.

What stays expensive: the 40 percent slab

While the 18 percent slab brings relief to mass-market buyers, the GST Council has also introduced a new 40 percent slab for luxury and sin goods. This includes:

- Motorcycles above 350cc, such as the Royal Enfield Himalayan and Triumph Speed 400  
- Large cars and SUVs with petrol engines above 1200cc or diesel engines above 1500cc, and length exceeding 4000mm  
- Hybrid vehicles that exceed the small car definition  
- Recreational vehicles like yachts and aircraft  

Previously, these items attracted a combined tax of up to 50 percent including compensation cess. The new flat 40 percent rate simplifies the structure but still keeps these products in the premium bracket.

Impact on industry and consumers

The GST overhaul is being hailed as a progressive step by industry leaders and economists alike. Here’s how it’s expected to play out:

- Automotive boost: Entry-level cars and bikes will become more accessible, especially in Tier 2 and Tier 3 cities. Brands like Maruti Suzuki, Hyundai, Tata Motors, TVS, and Honda are expected to benefit from increased demand  
- Consumer electronics: With ACs and TVs now cheaper, urban households may upgrade more frequently, driving growth for appliance makers  
- MSMEs and auto component suppliers: A uniform 18 percent GST on auto parts will help curb grey market activity, simplify compliance, and improve competitiveness  

Timing and strategic significance

The timing of the GST cut—just ahead of Navaratri and Diwali—is no coincidence. It’s a strategic move to stimulate festive spending and revive consumer sentiment amid global economic uncertainty. The simplification of GST slabs from four (5, 12, 18, 28 percent) to just two (5 and 18 percent) also signals a broader reform agenda aimed at making the tax regime more transparent and predictable.

Final word

Whether you're planning to buy your first car, upgrade your home appliances, or invest in a commuter bike, this GST revision is a timely gift. With prices set to drop and financing options becoming more attractive, the road ahead looks smoother for Indian consumers.

Sources: MSN, Hindustan Times, Deccan Herald, The Hindu, Cardekho, Times Now News