Mon Aug 18 07:50:00 UTC 2025: Okay, here’s a news article summarizing the provided text:

**GST Reform Proposal Fuels Auto Stock Rally**

**New Delhi, August 18, 2025, 11:06 IST** – Shares of major Indian automotive companies surged today following Prime Minister Narendra Modi’s announcement of proposed GST reforms targeting the automobile sector. The reforms, currently under review by state governments, aim to streamline the tax structure and potentially lower the overall GST burden on vehicles.

The rally was led by Maruti Suzuki India, whose shares jumped 7.34% to ₹13,881 on the National Stock Exchange (NSE). Mahindra & Mahindra also saw significant gains, climbing 4.82% to ₹3,422.8. Two-wheeler manufacturers also benefited, with Hero MotoCorp up 6.2% to ₹5,000 and Eicher Motors advancing 3.8% to ₹5,983. Other notable gainers included TVS Motors (7.22%), Ashok Leyland (7.74%), Bajaj Auto (4.29%), and Tata Motors (2.59%).

The proposed GST overhaul seeks to address classification disputes related to engine capacity and vehicle size, simplifying the current tax system. Currently, automobiles face a 28% GST, the highest slab, with an additional compensation cess ranging from 1% to 22% depending on the vehicle type. This results in a total tax incidence ranging from 29% to 50%. Electric vehicles currently have a GST of 5%.

Government sources, quoted by PTI, suggest the reforms could involve eliminating the 12% and 28% GST slabs, potentially leaving just 5% and 18% slabs, with a higher 40% rate reserved for a limited set of goods.

A reduction in GST is expected to boost demand and sales across the automotive sector by making vehicles more affordable. This increased consumption is a key driver behind the central government’s GST overhaul proposal.

The Group of Ministers (GoM) on GST rate rationalization will discuss the Centre’s proposal on August 21st. The GST Council, comprising the Centre and state finance ministers, is expected to meet in September to finalize the new GST rate structure. If approved, the reforms could be enacted before Diwali.

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