The newly implemented GST reforms, referred to as “GST 2.0” have brought significant changes to the automotive tax framework in India. These changes, effective from 22nd September 2025, aim to simplify the tax structure and make vehicles accessible for a wide array of customers. The impact of GST Reforms on Tata Cars will be in a great picture, as the company has announced to reduce the prices across its passenger vehicle line-up to fully transfer the tax reduction advantages to its customers.
Tata Motors is leading this significant change by reducing prices across its passenger vehicle line-up to fully transfer the tax reduction advantages to its customers. In this blog, we will analyse the impact of these reforms on major Tata vehicles including the Harrier, Safari, Nexon and Altroz.
The Revised GST Structure
The new framework introduced by the GST Council has streamlined the previous complex structure of 28% GST along with multiple cess into a simplified two-slab system.
- 18% GST: This rate applies to compact vehicles with engine size not more than 1200cc (petrol, LPG & CNG) and 1500cc (diesel), provided their length is less than 4000mm. The removal of the additional cess has resulted in a direct decrease in the final cost of these vehicles.
- 40% GST: Bigger cars and SUVs which were earlier taxed at GST rates between 43% to 50% (including cess), now fall under the new Tax rate of 40%. The removal of the cess is important because it has lowered the overall tax burden on these larger vehicles.
Tata Motor’s Response: An Analysis of Models
Tata Motors has emerged as one of the initial manufacturers to implement this GST cut advantage straight to their customers, making their popular models more competitive in the market.
Tata Harrier
The Tata Harrier, a mid-size premium SUV has received a robust price drop of up to ₹1.40 lakh!
The reduced prices of the vehicles are certainly a benefit to customers looking for solid mid-size SUV deals. This price drop is expected to increase Harrier sales and bolster its position amongst competitors.
Tata Safari
The Tata Safari, as Tata’s flagship SUV, has seen a mega price drop in the lineup of up to ₹1.45 lakh. The price cut on the Safari is also likely to appeal to customers who are looking for a large and feature-rich SUV, during this festive season.
Tata Nexon
The Tata Nexon, a popular compact SUV, has received the highest price drop of up to ₹1.55 lakh! The new price is because of the fact that this vehicle now falls under the new 18% GST bracket slab die to its sub-4 meter length and engine specifications.
Tata Altroz
The Tata Altroz, premium hatchback car has seen a price reduction of up to ₹ 1.10 lakh. Again, this is another vehicle receiving advantage from the new 18% GST slab. The price cut will help the Altroz’s chances in the competitive hatchback segment, where affordability and running costs are generally influential factors in customer decision-making.
GST 2.0 offers a simplified road tax structure for vehicles, making cars more affordable for consumers.
How It Affects Major Brands
- Mass-Market Brands: Mass-market manufacturers, such as Maruti Suzuki and Hyundai, will experience a major advantage; vehicles like Alto and Swift will be taxed at 18% making it more accessible for buyers.
- SUV Giants: Manufacturers like Mahindra and Toyota will be taxed at a 40% GST rate compared to the previous tax rate of 50% including CESS.
Conclusion
The GST 2.0 reforms have positively benefited the Tata Motors’ passenger vehicle portfolio. By passing on the full benefits of the tax reduction, the company is making its vehicles more affordable and accessible.
Repricings on popular models like the Tata Harrier, Tata Safari, Tata Nexon and Tata Altroz will bolster demand and kick-start the Indian Automotive Industry entering the impending festive seasons.
Tata Motors’ announcement follows government nudges and showcases a customer-centric initiative that will likely be received well by the market.