GST Rate Cut: Tata Nexon, Tiago, Mahindra XUV 3XO, Hyundai i20, Maruti Brezza Swift To See Major Price Drops

The recent overhaul of the Goods and Services Tax (GST) system in India has brought substantial price relief to automobile buyers across the country. Effective from September 22, 2025, the updated GST regime has replaced the earlier four-tier structure with a simplified two-rate system. Most products, including cars and two-wheelers, are now taxed at either 5% or 18%. Larger vehicles, which were earlier subject to multiple levies including GST and additional cess, are now covered under a flat GST rate of 40%.

Revised GST Slabs: 5% and 18% for Most Vehicles, 40% Flat for Larger Cars and SUVs

For the automobile sector, this change marks a significant departure from the previous taxation model. Earlier, most vehicles were taxed at a base rate of 28% with an additional cess depending on the vehicle type and engine capacity. The new rules eliminate the cess component entirely for most vehicle categories, resulting in noticeable price reductions across various segments.

Maruti Swift, Tata Tiago, Hyundai i20 See Big Price Cuts Under New 18% GST Rate

One of the biggest beneficiaries of this tax cut is the sub-4-metre car segment. Vehicles like the Maruti Swift, Tata Tiago, Hyundai i20, and similar hatchbacks are now subject to just 18% GST instead of the earlier combined rate of up to 29%.

As a result, these cars are expected to become considerably more affordable. Industry estimates suggest that the Maruti Swift could see a price drop of around Rs 71,000 to Rs 1.06 lakh. The Tata Tiago could become cheaper by approximately Rs 55,000 to Rs 94,000. Even premium hatchbacks like the Hyundai i20 are expected to see reductions in the range of ₹83,000 to Rs 1.24 lakh, while the sportier i20 N Line could become more affordable by up to Rs 1.38 lakh.

SUVs Like Maruti Brezza to Get Cheaper as GST Drops to 40%; Prices May Fall by Up to Rs 48,000

Compact SUVs are also seeing notable price adjustments. The Maruti Brezza, which runs on a 1,500 cc petrol engine, will now attract 40% GST-down from the earlier 45% due to the removal of cess. This could lead to a price cut of about 5%, translating into savings of Rs 30,000 to Rs 48,000. At present, the Brezza is priced between Rs 8.69 lakh and Rs 13.98 lakh, so the revised price range is likely to shift down to ₹8.39 lakh to Rs 13.50 lakh.

Tata Nexon, Mahindra XUV 3XO to See Major Price Cuts Under 18% GST

Other popular subcompact SUVs like the Tata Nexon and Mahindra XUV 3XO will also benefit under the new 18% GST rate, particularly the diesel variants. These models, which were previously taxed at effective rates of up to 31%, could now see price reductions ranging from Rs 99,000 to Rs 1.55 lakh for the diesel versions. Petrol variants of these same vehicles will also see meaningful cuts, with potential savings of Rs 68,000 to Rs 1.35 lakh depending on the model and trim level.

Larger SUVs and premium cars, which were earlier subject to a base GST of 28% plus a cess of up to 22%, now fall under a flat 40% GST rate. This revision, while still maintaining a relatively high tax slab, effectively reduces the total tax burden by around 6.6%. The result is likely to be substantial savings for buyers of high-end SUVs and sedans, with price drops exceeding Rs 1.5 lakh in some cases.

Electric vehicles remain an exception in the revised structure, continuing to benefit from the existing 5% GST rate. This move is in line with the government's ongoing push to promote clean mobility. The unchanged rate is expected to maintain consumer interest in EVs and support the broader transition to electric transportation.