- GST rate on small cars reduced to 18% to drive affordability
- Premium and luxury cars streamlined into a 40% slab
- SAVWIPL promises to pass benefits to customers across six brands
- Reform seen as a long-term boost for India’s auto ecosystem
Introduction
When the government announced a simplification of GST rates, it took a rapid acceleration for the Indian automobile industry. Car buyers across India are set to gain from a structure that reduces costs for mass-market vehicles while bringing a clear picture of the taxation of luxury cars. And welcoming this change is none other than Škoda Auto Volkswagen India Private Limited (SAVWIPL), which represents six global brands in India — Škoda, Volkswagen, Audi, Porsche, Lamborghini, and Bentley. The company called the reform a much-needed balance between affordability for the masses and aspiration for premium buyers.
What the Reform Means
The GST overhaul is straightforward, no-nonsense, yet impactful.
- Small cars → 18% GST slab: A reduction from 28% that immediately lowers ownership costs, making compact cars more accessible to first-time buyers and families.
- Luxury and premium cars → 40% GST slab: A simplification that replaces multiple complex rates, offering transparency and helping customers make confident choices.
By addressing both ends of the spectrum, the government has sent a clear signal — it wants India’s car market to grow inclusively, without alienating any segment of buyers.
SAVWIPL’s take
For SAVWIPL, the reform touches every brand in its diverse portfolio. On one side are the practical Škoda and Volkswagen models, which appeal to value-driven customers; on the other are Audi’s luxury charm, Porsche’s performance machines, and the ultra-luxury, niche offerings from Lamborghini and Bentley.
Piyush Arora, MD & CEO of SAVWIPL, praised the decision, noting that:
- An 18% slab on small cars will boost affordability and strengthen demand in the mass – segment.
- The unified 40% slab brings clarity to luxury purchases, reassuring customers who invest in high-end models.
- Simplification reflects a forward-looking tax approach, encouraging long-term industry stability.
Why It Matters
The reform’s importance stretches beyond lower prices. A transparent tax system builds trust, which can translate into stronger demand across categories. For manufacturers, it creates a predictable environment to plan investments and product strategies. For customers, it removes the guesswork from car buying.
This balance of affordability and aspiration could also enhance India’s global reputation, positioning it as a hub where both mobility solutions and luxury aspirations thrive side by side.
Conclusion
The GST rationalisation marks more than a tax change; it reflects a larger vision for India’s auto sector. SAVWIPL’s warm reception of the reform highlights how the industry views it as an enabler of growth. Affordable small cars can now reach a wider audience, while premium vehicles enjoy simpler, clearer taxation.
In doing so, the reform bridges the gap between practicality and aspiration, ensuring that India’s automotive journey moves forward with both inclusivity and ambition.