Buying a Car This Diwali? GST Cut Could Bring Big Savings – Here's What to Know

If you’re planning to buy a new car this Diwali, there’s good news. The government is preparing major reforms in the GST structure, which could reduce the cost of small and mid-size vehicles. On Independence Day, Prime Minister Narendra Modi highlighted plans to simplify taxes and make them more beneficial for the common people. Now, experts predict that these changes could directly impact car prices in the coming months.

Diwali Could Be the Best Time for Small Cars

Currently, small cars carry 28% GST plus additional cess, making the effective tax around 29%. The proposed reform aims to bring hatchbacks and vehicles under 4 meters with engines up to 1200cc under an 18% GST slab.

If implemented, buyers of hatchbacks and compact cars could see 10–11% savings, meaning thousands of rupees off the total cost

. This would be particularly beneficial for first-time buyers and those on a limited budget.

What About SUVs and Luxury Cars?

SUVs and luxury cars are currently taxed between 43% and 50%. The proposed reform may introduce a special 40% slab for these vehicles, so the savings will be smaller. However, Diwali is already a season of offers, with manufacturers providing discounts, cashback, and promotions that can reduce costs by up to Rs 1 lakh

.

Takeaway

For hatchback and compact car buyers, waiting until Diwali could combine GST savings with festive offers, making it an ideal time to purchase. For luxury and SUV buyers, the benefits will be limited, but festival discounts still make it worth considering.