(MENAFN- ForPressRelease) The rollout of GST 2.0 in September 2025 has marked a pivotal shift for India's automotive sector, streamlining tax structures, enhancing affordability, and catalysing consumer demand across vehicle segments. The reforms are not only simplifying compliance but also reshaping market dynamics.

Under the revised GST regime, small cars and motorcycles under 350cc now attract 18% GST, down from 28% plus cess, resulting in price reductions of up to INR 1 lakh for select models. This has improved affordability for middle-class and rural buyers, while simplified tax slabs have eased compliance, boosting production and inventory turnover.

Premium vehicles, including SUVs and high-end motorcycles, now face a flat 40% GST, slightly increasing costs but streamlining taxation. Electric vehicles continue to benefit from a 5% GST, reinforcing support for green mobility. Overall, GST 2.0 has lifted consumer sentiment, with automakers reporting record festive sales and strong booking momentum.

Post supply discount:

The industry has long grappled with disputes from tax authorities over post-supply discounts and the issuance of credit notes therein. Key concerns included the absence of discount terms in agreements at the time of supply, non-reversal of input tax credit (ITC) on commercial credit notes, and the classification of secondary discounts as services. In a significant trade facilitation measure, the GST Council has recommended omitting the requirement to establish post-sale discounts through prior agreements.

Further clarifications are issued on ITC treatment for commercial credit notes, secondary discounts, and promotional activities done by distributors on behalf of manufacturers. These long-awaited changes are poised to reduce unnecessary litigation and bring much needed clarity. It remains to be seen whether these clarifications will apply retrospectively.

Provisional refunds

Effective 1 October 2025, GST 2.0 introduced key procedural reforms to the refund mechanism under Section 54 of the CGST Act. A risk-based system now allows 90% provisional refunds for low-risk taxpayers, based on compliance history and system-generated risk scores. This aims to accelerate refunds for exporters and businesses with inverted duty structures, enhancing liquidity and reducing delays.

Refunds can now be withheld only in specific cases, with officers required to provide written justification. These changes are expected to streamline processes and improve transparency in refund administration

Consumer impact:

Benefit of increased affordability among consumers due to decrease in GST Rate which would result in an increase in disposable income and purchasing power indirectly boosting purchasing power which would in turn result in increased sales. To illustrate the impact of the recent GST rate cuts, Maruti Suzuki - one of Indiaâ€TMs leading automobile manufacturers - serves as a compelling example. The company witnessed a remarkable surge in customer interest and sales immediately following the announcement, with an unprecedented 30,000 vehicle deliveries completed on the very first day. This momentum was especially strong in the small car segment, where bookings surged by nearly 50%.

Since the GST revision, Maruti Suzuki has recorded approximately 75,000 new bookings, averaging around 15,000 per day. This represents a significant 50% increase over its typical booking volumes, clearly reflecting a sharp rise in consumer demand driven by improved affordability and positive market sentiment.

Company:-One Source

User:- Aditya Yadav

Email:[email protected]

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