Union Finance Minister Nirmala Sitharaman has recently announced a new tax structure, in which major changes have been made for the automobile industry. At first glance, this news may seem expensive to common customers because GST has been increased from 28% to 40% on large and luxury cars. But the real relief is that now these cars will not be put separately, which will make vehicles like Mercedes-Benz and Fortuner cheaper and the luxury vehicles of companies like BMW can be slightly cheaper than before.

Why will luxury vehicles be cheap?

• In earlier tax arrangements, Ice cars were applied from 17% to 22% in addition to 28% GST. The effect of this was that the total tax burden reached 45% to 50%. The new system will now have only 40% GST and there will be no cess. That is, the total tax burden will decrease and the price of trains will decrease slightly. This change will be applicable from 22 September 2025, before the fine festive season, when sales are the highest in the automobile sector.

Not only luxury cars, these vehicles are also affected

• The benefit of the new GST system will not be limited to luxury cars, but it includes many more changes. Now bus, trucks and ambulances will levy 18% GST, which was 28% earlier. The rate of 18% will also be applicable on auto parts, irrespective of their HS code. Three vehicles will also come in this tax slab. In this way, this decision will give relief not only to private vehicles but also to commercial vehicle industry.

What did Mercedes and Audi say?

• MD and CEO Santosh Iyer of Mercedes-Benz India called the decision a progressive step. He said that the government has heard the long -standing demand, which will increase the consumption and will speed up the automobile industry. At the same time, Audi India chief Balbir Singh Dhillon described it as positive for the development of the industry and said that maintaining a low rate for electric vehicles is a welcome step. This will enable the EV portfolio and more customers.

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Prime Minister Narendra Modi announced GST reform in his speech on 15 August 2025. The government is now preparing to reduce the tax on small cars. Engine below 1200cc and cars smaller than 4 meters so far 28% GST + 1% cess. After the proposed change, there is a plan to bring it to 18% GST + 1% cess. Middle class will get direct benefit of this. Let us see how much impact the change will be on the price of Tata punch.

New price of Tata Punch after GST reduced

• At present, the ex-showroom price of Tata punch starts from Rs 6 lakh to Rs 10.32 lakh. Its CNG variant is priced between 7.30 lakh to 10.17 lakh rupees. Currently, 28% GST and 1% cess are applicable to these. If the tax becomes 18% GST and 1% cess, then the initial price of Tata Punch will be reduced to about Rs 5.53 lakh ex-showroom. However, the on-road price will also include road tax, insurance and other charges, so the real price may be slightly different.

Tata punch features

• Tata punch is a stylish and strong micro SUV, which is better for both the city’s driving and family use. It provides features like 10.25-inch touchscreen system, Android Auto and Apple CarPlay support, 6-speaker Harman Sound System, Bluetooth connectivity and cruise control. Apart from this, it also has premium features like chuls entry, push-button start, single pen sunroof, front and rear USB charger, multi-function steering wheel.
• Punch is also excellent in terms of safety. This includes features like ABS, EBD, Esc, two airbags, rear cameras, TPMS and ISOFIX Child Mounts. The special thing is that it has got a 5-star rating in the GNCAP crash test.

Tata punch engine and mileage

Tata punch contains two engine options including 1.2L Revotron Petrol Engine and CNG version. This SUV is available in both manual and AMT transmission options. Talking about mileage, its petrol version gives power up to 20.09 kmpl and CNG version about 26.99 km/kg.

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GST reforms: The government is going to take big steps towards simplifying the GST system. It was announced by Prime Minister Narendra Modi on August 15 in his speech from the ramparts of the Red Fort on the occasion of Independence Day. PM Modi said that major changes will be made in the GST structure so that the tax system can be easier for the common people and traders.

Currently, four GST rates are applicable in the country – 5 percent, 12 percent, 18 percent and 28 percent. According to the news agency PTI, the government is preparing to abolish the slab of 12 percent and 28 percent of these. For this, the Group of Finance Ministers of the states has been given a blueprint of the scheme and a final decision can be taken on this in the meeting of the GST Council to be held in September. Before that the Group of Ministers will study this proposal.

What will change?

At present there is no GST on essential items. 5% GST on everyday goods like soap, toothpaste etc., 12% on normal items, 18% on electronic gadgets and services and 28% GST on luxury and harmful items.

According to the new proposal:

12% slab will be eliminated and the items under it will be brought to 5% GST.

28% slab will be eliminated and most of its items will be brought to 18%.

What will be cheap?

Objects that become cheaper after entering 5% GST:
Hair oil, toothpaste, soap, tooth powder, processed food, frozen vegetables, condensed milk, snacks, computers, mobile, geysers, pressure cooker, vacuum cleaner, water filter, ironing, bicycle, utensils, barbecue, geometry boxes, globes, naps, masks, agricultural machinery, HIV diagnostic coil And Ayurvedic medicines.

Interest by bringing 18% (in the first 28%):
AC, fridge, washing machine, TV, motorcycle seat, car, insurance, plastic products, razers, printers, aluminum foil, sugar syrup, protein concentrates and tamped glasses.

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