GST Rate Changes in Transportation Sector - New GST Rate on
Motor Vehicles, Cars, Bikes, Tractors, Bicycles
Introduction
The 56th GST Council
meeting held on 3rd September, 2025 at Sushma Swaraj Bhavan, New
Delhi, chaired by Union Finance & Corporate Affairs Minister Smt. Nirmala
Sitharaman, brought significant changes in the transportation sector under
GST.
The decisions reflect a two-fold
approach:
- Providing relief to the common man
and middle class by reducing GST rates on small cars, ambulances,
buses, three-wheelers, motorcycles up to 350cc, and essential vehicle
parts.
- Increasing GST rates on luxury and
high-end personal transport such as large cars, SUVs, big motorcycles,
yachts, and personal aircraft, thereby ensuring equitable revenue
generation.
The revised rates are
expected to boost affordability, support domestic automobile demand, and
promote a balanced taxation framework.
Changes in
GST Rates – Transportation Sector
Reduction
of GST Rates from 28% to 18%
|
S.
No.
|
HSN
Code
|
Description
of Goods
|
Revised
GST Rate
|
|
1
|
4011
|
New
pneumatic tyres of rubber (other than bicycle/aircraft tyres, rear tractor
tyres)
|
18%
|
|
2
|
8701
|
Road
tractors for semi-trailers (>1800 cc engine capacity)
|
18%
|
|
3
|
8702
|
Motor
vehicles for transport of 10+ persons (excluding bio-fuel buses for public
transport)
|
18%
|
|
4
|
8703
|
Small
petrol/LPG/CNG cars (≤1200cc, ≤4000mm length)
|
18%
|
|
5
|
8703
|
Small
diesel cars (≤1500cc, ≤4000mm length)
|
18%
|
|
6
|
8702
/ 8703
|
Ambulances
with complete fitments
|
18%
|
|
7
|
8703
|
Three-wheelers
|
18%
|
|
8
|
8703
40 / 8703 60
|
Small
hybrid cars (≤1200cc petrol/electric, ≤4000mm length)
|
18%
|
|
9
|
8703
50 / 8703 70
|
Small
hybrid cars (≤1500cc diesel/electric, ≤4000mm length)
|
18%
|
|
10
|
8704
|
Goods
transport vehicles (other than refrigerated)
|
18%
|
|
11
|
8706
|
Chassis
fitted with engines (8701–8705)
|
18%
|
|
12
|
8707
|
Bodies
(including cabs) for vehicles (8701–8705)
|
18%
|
|
13
|
8708
|
Parts
& accessories of motor vehicles (8701–8705, except tractors)
|
18%
|
|
14
|
8711
|
Motorcycles
and mopeds ≤350cc (including sidecars)
|
18%
|
|
15
|
8714
|
Parts
& accessories of motorcycles (heading 8711)
|
18%
|
|
16
|
8903
|
Rowing
boats and canoes
|
18%
|
|
17
|
9401
20 00
|
Seats
of a kind used for motor vehicles
|
18%
|
Increase of
GST Rates from 28% to 40%
|
S.
No.
|
HSN
Code
|
Description
of Goods
|
Revised
GST Rate
|
|
1
|
8703
|
Luxury
motor cars and vehicles (excluding small cars, ambulances, three-wheelers,
and hybrids at concessional rates)
|
40%
|
|
2
|
8703
40 / 8703 60
|
Large
hybrid petrol/electric cars (>1200cc or >4000mm)
|
40%
|
|
3
|
8703
50 / 8703 70
|
Large
hybrid diesel/electric cars (>1500cc or >4000mm)
|
40%
|
|
4
|
8711
|
Motorcycles
exceeding 350cc
|
40%
|
|
5
|
8802
|
Aircraft
for personal use
|
40%
|
|
6
|
8903
|
Yachts
and vessels for pleasure/sports
|
40%
|
FAQs on GST
Rate Changes in Transportation Sector
Q1. What is the revised
GST rate on small petrol, LPG, CNG, or diesel cars? What is covered under small
cars?
The GST rate on all small
cars has been reduced from 28% to 18%.
- Petrol/LPG/CNG cars = Engine ≤1200
cc, length ≤4000 mm
- Diesel cars = Engine ≤1500 cc, length
≤4000 mm
Q2. What is the new GST
rate on vehicles exceeding 1500 cc or length exceeding 4000 mm? What is the GST
rate on utility vehicles?
Ans: All mid-size and
large cars (engine >1500 cc or length >4000 mm) will attract 40% GST.
Utility Vehicles (SUV,
MUV, MPV, XUV, etc.) with engine >1500 cc, length >4000 mm, and ground
clearance ≥170 mm will also attract 40% GST without any cess.
Q3. What is the GST rate
on 3-wheelers?
Ans: 18% (reduced
from 28%).
Q4. What is the GST rate
on buses and vehicles meant to carry 10+ persons including the driver?
Ans: 18% (reduced
from 28%).
Q5. What is the GST rate
on ambulances?
Ans: 18% (reduced
from 28%).
Q6. What is the GST rate
on goods transport vehicles such as lorries and trucks?
Ans: 18% (reduced
from 28%).
Q7. What is the GST rate
on trailers and semi-trailers of tractors?
Ans: Tractors (other than road tractors for
semi-trailers above 1800cc) = 5%
Road tractors for semi-trailers (>1800cc) = 18% (reduced from 28%)
Q8. What is the GST rate
on motorcycles?
Ans:
Up
to 350cc = 18%
Above
350cc = 40%
Q9. Does 18% apply to
350cc motorcycles too?
Ans:
Yes,
motorcycles up to and including 350cc = 18%.
Only
those exceeding 350cc = 40%.
Q10. Earlier mid-size and
big cars attracted 28% GST + 17–22% cess (total 45–50%). What will be the new
rate?
Ans:
The
new rate is 40% flat GST, with no cess.
Q11. Has GST been reduced
on bicycles and parts?
Ans:
Yes,
from 12% to 5%.
Q12. Why has small
agricultural tractors not been fully exempted?
Ans:
Full
exemption would block ITC for manufacturers, increasing costs that would be
passed on to farmers. A concessional rate ensures relief without harming
domestic producers.
Conclusion
The 56th GST Council
meeting’s transportation sector decisions strike a balance between affordability
for essential vehicles and higher taxation for luxury goods.
- The move from 28% to 18% on
small cars, three-wheelers, ambulances, buses, motorcycles ≤350cc, and
essential parts is a big relief for the middle class and trade sectors.
- The hike from 28% to 40% on
luxury cars, SUVs, large motorcycles, yachts, and personal aircraft
ensures that luxury consumption bears a fairer tax burden.
Overall, the changes are
expected to encourage growth in the automobile sector, promote mobility for
the common man, and rationalize GST collection.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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