GST Rate Cut: Did auto companies and customers benefit? The government answered the question.

News Topical, Digital Desk : Just before the festive season this year, the government announced major GST reforms and reduced rates. Now, the government has shared information on their impact. This information was provided in written response to a question regarding whether the GST reforms have benefited the auto sector and vehicle buyers. The government stated in the Lok Sabha that the recent GST rate reduction has had a positive impact on vehicle sales. Road Transport and Highways Minister Nitin Gadkari stated that an increase in vehicle demand has been observed since the new GST rates came into effect on September 22, 2025.

How much has the auto sector been impacted? In a written reply to a question in the Lok Sabha, the Minister stated that, according to data from the Vahan portal (Vahan), total vehicle registrations (excluding Telangana) registered a year-on-year growth of 29.1% in October 2025. Furthermore, the Minister stated that, according to information received from the Society of Indian Automobile Manufacturers (SIAM), lower GST rates have reduced vehicle on-road prices, financing costs, and road taxes. This has particularly encouraged first-time vehicle buyers and price-sensitive buyers in rural areas. The government stated that the reduction in the GST rate on commercial vehicles from 28% to 18% has also significantly benefited this segment. This is expected to boost sales of new buses and trucks, as well as fleet renewals. 

GST exemption supports old vehicle replacement plan The Minister stated that the government's Voluntary Vehicle Modernization Program (VVMP) already offers benefits for vehicle replacement, including road tax exemptions, waiver of registration fees, and incentives for purchasing new vehicles in lieu of scrapping. Lower GST rates have further strengthened this process. According to the government, the increased focus on fleet renewal will help expand and improve public transport services in both urban and rural areas. Furthermore, the availability and affordability of vehicles will increase logistics efficiency, reduce freight rates, and reduce overall transportation costs. The government clarified that this rational reduction in GST rates is not only boosting the automobile sector but also strengthening the transport and logistics ecosystem.

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