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GST Revamp Puts Mass Autos at 18% and Luxury at 40% as Brokers Back Maruti and Sin-Goods Shares Fall

With rates set to take effect on September 22, companies are modelling price changes and platforms are preparing for Section 9(5) delivery-tax compliance while final classifications are awaited.

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Overview

  • Small passenger cars under 4 meters (petrol up to 1200cc or diesel up to 1500cc) move to 18% GST, while larger and utility vehicles shift to a 40% rate with prior cesses removed, implying modest price relief for some SUVs and MPVs.
  • Motorcycles below 350cc drop to 18% GST and those above 350cc move to 40%; bikes over 350cc account for roughly 1.5% of sales, so most two-wheeler buyers benefit.
  • Brokerages flagged autos as beneficiaries, with Centrum raising Maruti Suzuki’s target price by 15% as more than 60% of its portfolio falls into the 18% bracket.
  • Local online delivery is brought under Section 9(5) at 18% GST when partners are unregistered; JM Financial expects a negligible hit to Swiggy and Zomato given free-delivery prevalence and existing fee pass-throughs.
  • A CBIC interview indicating potential additional levies on sin goods beyond the 40% band drove declines in ITC, Varun Beverages and VST Industries, adding a policy overhang for the category.