Effective September 22, 2025, India's GST on cars is restructured into two main, simplified slabs: 18% for small cars/hatchbacks (under 4m, specific engine sizes) and 40% for SUVs and luxury vehicles. Electric vehicles (EVs) retain a 5% rate. This revised structure generally lowers taxes on smaller, budget-friendly cars.
With the introduction of GST Reform 2.0 in September 2025, the government has further refined the tax structure—reducing the rate for small cars to 18%, imposing 40% on other vehicles, and maintaining a concessional 5% rate for electric vehicles.
Petrol & Petrol Hybrid, LPG, CNG Cars (≤1200cc & ≤4000mm) GST rate reduced from 28% to 18%. Diesel & Diesel Hybrid Cars (≤1500cc & ≤4000mm) GST rate reduced from 28% to 18%. Luxury Cars & Larger Hybrids (beyond small-car thresholds) GST rate increased from 28% to 40%.
What are the new changes in GST 2025? Starting September 22, 2025, GST in India will be simplified to primarily two rates: 5% and 18%, with a special 40% rate on luxury and sin goods like tobacco and high-end vehicles.
GST was introduced in Singapore on 1 April 1994. Since then, GST rates have evolved from 3% in 1994 to 9% in 2025.
Payment amounts are recalculated every July
For example, the information from your 2024 tax return determines the GST/HST credit amount you get for the payment period from July 2025 to June 2026. You could get up to: $533 if you are a single individual. $698 if you are married or have a common-law partner.
Modes of Payment for the 2025 GSTV – Cash
By doing so, eligible citizens will receive their GSTV – Cash earlier, from 6 August 2025. Citizens without PayNow-NRIC linked bank accounts but have a DBS/POSB, OCBC, or UOB bank account, may provide their bank account information at the govbenefits website by 28 July 2025.
Car prices are showing signs of stabilizing and potentially dropping moderately in 2025, especially for new vehicles as inventory improves, but high sticker prices from recent years remain, with analysts predicting slight decreases (3-7%) driven by increased incentives and automaker strategies, while used car prices might stay firm with slight seasonal dips, though some luxury used vehicles still command high prices. Factors like increased supply, manufacturer incentives, and potential economic shifts will influence actual price drops.
In this case, the sum of CGST and SGST/UTGST is equal to the total GST amount. Here's an example: If a product is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated will be = 1,000+ (1,000X(18/100)) = 1,000+180 = Rs. 1,180.
As the car limit for the 2025–26 financial year is $69,674, the maximum GST credit Darren can claim is $6,334 (1/11 × $69,674). Darren reports $69,674 at label G10 on his activity statement and includes a GST credit of $6,334 at label 1B.
"For new U.S.-assembled vehicles purchased in 2025-2028, eligible taxpayers can deduct up to $10,000 per year in auto loan interest, whether they itemize or take the standard deduction." THE "BIG, BEAUTIFUL, BILL" INCLUDES A CAR LOAN INTEREST TAX DEDUCTION.
Compact SUVs that meet the criteria for small cars are taxed at 18% GST. All other SUVs, which are larger or more powerful, attract 40% GST. From September 2025, all cars fall into just two slabs: 18% for qualifying small and compact cars, and 40% for larger, high-end, or luxury cars as well as bigger SUVs.
Full List Of Cars And Bikes That Get Cheaper Under GST 2.0
Low road tax cars
GST 2.0 is a revised tax structure effective from September 22, 2025. For Toyota, it means lower GST rates across its lineup: 18% for sub-4m small cars and 40% for larger cars/SUVs.
Key Takeaways. For most, the best time to buy a new car is during year-end sales from Late November through December 2025. Waiting until 2026 likely means higher prices. Federal tax credits for both new and used EVs expire on September 30, 2025, making this the final window to capture thousands in savings.
For the July 2025–June 2026 benefit year, the maximum annual GST amounts are: $533 – Single individual. $698 – Married or common-law couples. $184 – Per eligible child under 19.
How to Avoid GST on Overseas Purchases Legally
Assessable income for the Assessment Year (AY) 2024 must not exceed $39,000. Must not own more than one property. If the annual value (AV) of your home is up to $21,000 as of 31 December 2024, then you're eligible for $850.
GST consolidates from four to two rates: standard 18% and 5% reduced; new 40% levy. India's Goods and Services Tax Council has implemented the simplification of GST rates from 22 September 2025.
Subtracting GST from Price
To calculate how much GST was included in the price, divide the total price by 11 ($1000∕11=$90.91). To calculate the price without GST, divide the price by 1.1 ($1000∕1.1=$909.09).
If you are eligible for the 2025 GST Voucher (GSTV) – Cash and/or GSTV – MediSave and have signed up for a previous Government payout (e.g., 2024 GSTV), you will automatically receive your 2025 GSTV – Cash and/or GSTV – MediSave in August 2025. No further action is required on your part.