As Diwali 2025 approaches, there’s exciting news for eco-conscious buyers in India! The government is set to slash GST rates on small cars (under 1200cc) and two-wheelers (up to 350cc) from 28% to 18%, making these vehicles up to 10% more affordable. This move, announced by Prime Minister Narendra Modi during his Independence Day speech, is part of a broader tax reform to simplify GST slabs from four (5%, 12%, 18%, 28%) to two (5% and 18%). Set to be finalized by the GST Council in October 2025, this reduction not only makes festive shopping lighter on the wallet but also aligns with a push for greener, more sustainable mobility.
Small Cars and Bikes
Small cars and bikes are often the backbone of urban commuting, offering fuel efficiency and lower emissions compared to larger vehicles. With this GST cut, models like the Maruti Suzuki Alto, Tata Tiago, and popular two-wheelers like the Hero Splendor or Bajaj Pulsar will become more accessible. This is a win for middle-class families and young buyers who prioritize affordability and environmental responsibility. By encouraging the adoption of smaller, fuel-efficient vehicles, the government is indirectly promoting a reduction in carbon footprints, especially in crowded cities where air pollution is a growing concern.
With Less GST
Moreover, the proposed inclusion of hybrid cars (up to 1500cc) in the 18% GST slab is a game-changer for eco-friendly transport. Hybrids, which combine electric and fuel power, offer better mileage and lower emissions than traditional petrol or diesel vehicles. Brands like Toyota and Honda, with models like the Hyryder and City Hybrid, could see a surge in demand. Meanwhile, electric vehicles (EVs) continue to enjoy a 5% GST rate, and hydrogen fuel-cell vehicles sit at 12%, both free from additional cess. These policies signal a clear commitment to sustainable mobility, making Diwali 2025 a festival of both celebration and conscious choices.
This GST reduction isn’t just about savings; it’s about shaping a greener future. Smaller vehicles and hybrids require less fuel, reducing dependence on fossil fuels and easing the strain on India’s energy resources. For buyers, this means lower running costs and a chance to contribute to cleaner air. However, luxury vehicles may face a new 40% tax slab, ensuring that the tax structure remains progressive while prioritizing affordability for the masses.
Eco-friendly Diwali
As we light diyas this Diwali, let’s also celebrate smarter, eco-friendly choices. The GST cut on small cars, bikes, and hybrids is a step toward sustainable living without compromising on convenience. So, whether you’re eyeing a zippy two-wheeler or a compact car for your family, this festive season is the perfect time to invest in a greener ride. Let’s make Diwali 2025 not just a festival of lights, but a milestone in India’s journey toward a cleaner, more affordable future.