Automobiles and ancillaries get a big push through GST reforms

New Delhi [India], September 12 (ANI): The major rationalisation of GST rates for the road transport and automobile sector provides tax relief for two-wheelers, cars, tractors, buses, commercial vehicles, besides auto components.

This reform is poised to make vehicles more affordable, enhance logistics efficiency, and stimulate demand in both urban and rural markets, according to the Ministry of Road Transport and Highways.

"It will also strengthen MSMEs in the auto-component supply chain, create employment, and promote cleaner, more efficient mobility. By simplifying and stabilising the tax framework, the move boosts manufacturing competitiveness, supports farmers and transport operators, and reinforces national initiatives such as Make in India and PM Gati Shakti," the statement from the ministry said.

The recent reduction in GST rates across categories of vehicles and auto components is a transformative step that will benefit manufacturers, ancillary industries, MSMEs, farmers, transport operators, and millions of workers in both the formal and informal sectors, the Ministry added.

Among key impacts of the GST rate reduction is lowering prices for two-wheelers, small cars, tractors, buses, and trucks.

It will also lead to higher demand, leading to job creation in manufacturing, sales, logistics, and services; besides expansion of credit-driven vehicle purchases through NBFCs, banks, and fintechs; and stronger Make in India push, improved competitiveness, and cleaner mobility.

"These reforms mark a transformative step--bringing relief to farmers, MSMEs, small traders, women, youth, and the middle class, while ensuring ease of doing business across India. This is more than just a policy change; it's a step towards empowering citizens and strengthening our economy," Minister Nitin Gadkari said in a post on X.

The recent GST reforms will bring in benefits across the ecosystem.

Over 3.5 crore jobs in auto and allied sectors are expected to be supported across MSMEs, having multiplier effect on small businesses in tyres, batteries, glass, steel, plastics, and electronics.

Additionally, it will bring in more opportunities for drivers, mechanics, gig workers, and service

The GST rate reduction also incentivises replacement of old, polluting vehicles with fuel-efficient models; besides promoting adoption of buses and public transport, reducing congestion and emissions.

"The GST rationalisation represents a key milestone in India's drive toward affordable, efficient, and sustainable mobility. By lowering the tax burden on vehicles and auto components, the reform benefits consumers, strengthens the auto ecosystem, supports MSMEs, and boosts employment across both urban and rural India," the ministry said.

On September 22, the first day of Navratri, all changes in GST rates will come into effect.

For instance, the rate cuts for the automobile sector are across different categories. It includes bikes (up to 350cc, which also accommodates bikes of 350cc), Buses, Small cars, Medium and luxury cars, Tractors (