The government’s new GST reform is set to bring some relief to car buyers. With the tax structure simplified and rates lowered for most vehicles, hatchbacks and SUVs are expected to become more affordable. Models like the Maruti Brezza, Tata Nexon, Mahindra XUV 3XO, Hyundai i20, WagonR and Swift could see big price drops once the changes take effect.
What Has Changed in GST?
Until now, cars were taxed at 28% GST plus an extra cess that could go up to 22%, depending on the size and type of vehicle. This meant buyers were paying an effective tax of 29% to 50% on their cars. From 22 September 2025, this system has been replaced with just two slabs 5% and 18% for most goods and services. For cars, small vehicles fall under the 18% rate, while bigger cars and SUVs are taxed at 40%. Even though 40% sounds high, it is still lower than the earlier 45-50% effective tax. Importantly, the cess has been removed, making pricing simpler and more transparent.
Big Savings on SUVs
The Maruti Brezza, which uses a 1,500cc petrol engine, will now attract 40% GST instead of the earlier 45%. That means its price could fall by around ₹30,000 to ₹48,000, bringing the base variant closer to ₹8.39 lakh. The Tata Nexon and Mahindra XUV 3XO benefit even more. Both petrol and diesel versions will now fall under the 18% slab. Diesel variants, which were earlier taxed at 31%, could see the biggest savings up to ₹1.55 lakh in the case of Nexon diesel and around ₹1.49 lakh for XUV 3XO diesel. Petrol versions could also get cheaper by as much as ₹1.35 lakh.
Hatchbacks to Get More Affordable
The entry-level hatchback segment will see major price cuts too. Popular models like the Maruti Swift could become cheaper by ₹71,000 to ₹1.06 lakh. The Tata Tiago may see prices fall by ₹55,000 to ₹94,000, while the Maruti WagonR could become cheaper by up to ₹84,000. For budget buyers, the Maruti Alto K10 is also set to get more affordable, with reductions between ₹47,000 and ₹68,000. These price drops will make small cars even more attractive for first-time buyers.
Premium Hatchbacks Like i20 Also Benefit
It’s not just the budget-friendly cars premium hatchbacks will also get cheaper. The Hyundai i20 could see a price cut of ₹83,000 to ₹1.24 lakh, while the sportier i20 N Line may get an even bigger reduction of up to ₹1.38 lakh. With lower prices, premium hatchbacks may see stronger demand from city buyers who want better design and features but still want affordability.
Will Buyers Actually See the Discounts?
The new GST rates are already in place, but how much of the tax benefit reaches customers depends on car manufacturers. Some companies may pass on the full amount, while others might adjust prices only partially, depending on production costs and demand. For now, buyers should watch official announcements from carmakers and dealerships to check the revised prices. With the festive season coming up, the timing of this GST cut could make it easier for many families to bring home a new car.