GST on Cars — 18% vs 40% — Which Slab Is Your Car In?
GST 2.0 split the car market in two. Small cars dropped from 28% (+cess) to 18% — a genuine price cut. SUVs and large cars moved to the new 40% slab, which replaced the old 28% + compensation cess. Use the calculator to see the GST inside any car's price, then check the slab rules below.
🚗 GST in a Car's Price
GST amount
Base (pre-GST)
Price with GST
Ex-showroom = base + GST. On-road price adds road tax (state RTO), insurance and charges on top.
⚠️ Disclaimer: CalcSmart is not a tax, financial, legal or medical advisor. Calculators and content here are for general information only, compiled from publicly available rules and rates that change frequently. Always verify the accuracy and freshness of figures with official sources (e.g. incometax.gov.in, cbic.gov.in, your bank) or a qualified professional before acting on any result.
Car GST Slabs After GST 2.0 (2026)
Vehicle
Old rate (pre Sep 2025)
New rate
Effect
Small petrol car (<1200cc, <4m)
28% + 1% cess
18%
≈9–10% cheaper
Small diesel car (<1500cc, <4m)
28% + 3% cess
18%
≈10–11% cheaper
SUV / sedan above 4m or bigger engine
28% + 17–22% cess
40%
Roughly similar to slightly cheaper (cess gone)
Electric vehicle
5%
5%
Unchanged
Motorcycle ≤350cc
28%
18%
Cheaper
Motorcycle >350cc
28% + 3% cess
40%
Costlier
The "small car" definition is the same one the industry has used for years: length under 4 metres and engine under 1200cc (petrol) or 1500cc (diesel). Miss either limit and the car is taxed at 40%. This is why several models are sold in sub-4-metre versions in India.
Ex-Showroom vs On-Road Price
GST is built into the ex-showroom price. Your final on-road price adds state road tax (3–20% depending on state and price band), registration, mandatory insurance, and handling. So a ₹8,00,000 ex-showroom hatchback contains about ₹1,22,034 of GST (18/118 of the price) — and the RTO then taxes you again on the GST-inclusive amount.
💡 EVs remain the tax outlier: 5% GST, and many states waive road tax entirely. On a like-for-like ₹15 lakh purchase, an EV can carry ₹3–4 lakh less tax than a 40%-slab SUV.
Frequently Asked Questions
Two rates apply since GST 2.0 (September 2025): 18% for small cars (under 4 metres with petrol engines below 1200cc or diesel below 1500cc) and 40% for all larger cars and SUVs. The 40% slab replaced the old 28% + compensation cess system. Electric vehicles stay at 5%.
Small cars and motorcycles up to 350cc became roughly 9–11% cheaper as they moved from 28%+cess to 18%. For SUVs the change is mostly neutral — 40% flat is comparable to the old 28% plus 17–22% cess, and slightly lower in many cases.
If it's a small car at 18%: GST = 10,00,000 × 18/118 ≈ ₹1,52,542. If it's an SUV at 40%: GST = 10,00,000 × 40/140 ≈ ₹2,85,714. Use the calculator above for exact figures.
GST on used cars applies only to the dealer's margin (the difference between sale and purchase price), at 18%, and only when sold by a registered dealer. Private person-to-person used car sales attract no GST at all.
On-road price adds state road tax (3–20% of the ex-showroom price depending on state and car value), registration charges, mandatory insurance, and often a TCS of 1% for cars above ₹10 lakh, which you can adjust against your income tax.