GST Cut on SUVs and Luxury Cars : Prices to Drop from 22 September 2025

The government has announced a major change in GST rates for big SUVs and luxury cars. This decision will make premium cars cheaper for Indian buyers. The new GST rates will start from 22 September 2025.

What Has Changed in GST?

Earlier, buyers of large SUVs and luxury models had to pay 28% GST plus a compensation cess of 15% to 22%. This brought the total tax to almost 43%–50%.

Now, the new system will apply 40% GST but will remove the compensation cess completely. This means the total tax is reduced. On average, customers will save 8% to 10% in tax.

Which Cars Will Benefit?

Popular models like Toyota Fortuner, Mercedes-Benz GLS, and other premium SUVs will now become more affordable. This is expected to attract more buyers in the luxury car segment.

Impact on Customers and Market

• Lower prices for buyers : SUVs and premium cars will cost less.
• Boost for companies : Car makers can expect higher sales.
• More competition : Premium car brands may bring new models to India.