Next-gen GST reforms: Purchasing cars, bikes, tractors gets cheaper

New Delhi [India], September 4 The GST Council, in its meeting on Wednesday, decided upon major changes in tax rates on automobiles as part of the next-generation GST reforms announced by Prime Minister Narendra Modi.

In the automobile segment, GST on petrol and petrol-hybrid cars, as well as LPG and CNG variants not exceeding 1200 cc engine capacity and 4000 mm length, has been reduced from 28 per cent to 18 per cent.

Diesel and diesel-hybrid cars with engine capacity not exceeding 1500 cc and 4000 mm in length will also see their rates come down from 28 per cent to 18 per cent.

Three-wheeled vehicles, motorcycles with engine capacity up to 350 cc, and motor vehicles used for the transport of goods will similarly move from the 28 per cent bracket to 18 per cent.

For the agriculture sector, tractors, which earlier attracted 12 per cent GST, will now be taxed at 5 per cent.

Tractor tyres and parts, which were in the 18 per cent slab, have also been brought down to 5 per cent.

The restructuring reduces the tax burden across multiple categories of vehicles and farm machinery.

Earlier today, the announcements for GST reforms were made by Finance Minister Nirmala Sitharaman.

On the essential items front, items of daily household use will now cost less. Products such as hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes, and shaving cream, which earlier attracted 18 per cent GST, will now fall under the 5 per cent bracket.

Similarly, butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujiya, and mixtures have all seen their GST rate reduced from 12 per cent to 5 per cent.

Utensils, feeding bottles, baby napkins, and clinical diapers have also become cheaper with the rate cut to 5 per cent.

Sewing machines and their parts, previously taxed at 12 per cent, will now attract only 5 per cent GST.

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