Wed Sep 03 20:07:00 UTC 2025: Here’s a summary of the text and a rewritten news article:

**Summary:**

The GST Council has approved a major overhaul of the Goods and Services Tax (GST) regime, simplifying it from four slabs to two (5% and 18%) with a special 40% rate for certain items. The changes, effective September 22, 2025, will lower taxes on small cars, entry-level bikes, and auto components, while maintaining a 5% rate for EVs. Larger vehicles and motorcycles, as well as racing cars, will be subject to a higher 40% levy. Industry leaders are generally positive about the changes, anticipating boosted consumption and a positive impact on the automotive industry and related sectors.

**News Article:**

**GST Council Approves Landmark Rate Simplification, Automakers Cheer**

**NEW DELHI, September 4, 2025** – In a move hailed as a significant boost for the Indian automotive industry and the economy at large, the GST Council has approved a sweeping simplification of the Goods and Services Tax (GST) regime. Effective September 22, 2025, coinciding with the start of Navaratri, the complex four-tier structure will be replaced with a streamlined two-rate system of 5% and 18%, alongside a special 40% levy for select luxury and high-performance vehicles.

The most immediate impact will be on the cost of small cars and entry-level motorcycles, which will see a reduction in GST. Petrol, LPG, and CNG vehicles under 1,200 cc (and 4,000 mm length) and diesel vehicles under 1,500 cc (and 4,000 mm length) will move to the 18% rate, down from the current 28%. Motorcycles up to 350 cc will also benefit from the 18% rate. Conversely, larger automobiles (above 1,200 cc and 4,000 mm) and motorcycles (above 350 cc) will face a steeper 40% tax. Electric vehicles retain their favorable 5% GST rate.

Furthermore, GST on auto components has been reduced to a uniform 18%, a long-sought reform by the Automotive Component Manufacturers Association of India (ACMA). According to ACMA DG Vinnie Mehta, this move will “curb the grey market, ease compliance, support MSMEs, and enhance the global competitiveness” of the industry.

Industry reactions have been largely positive. Santosh Iyer, MD & CEO of Mercedes-Benz India, commended the government for “listening to the automotive industry’s long-standing wish list of rationalising GST rates.” He added that the move would “induce the much-needed impetus by boosting consumption.”

Rajesh Jejurikar, ED & CEO, Auto and Farm Sector, M&M, echoed this sentiment, stating that the changes would make tractors and farm machinery more affordable and stimulate demand across the entire ecosystem.

The GST Council’s decision marks a significant step towards simplifying India’s tax structure and fostering growth in the automotive sector, a key driver of the Indian economy. The streamlined rates are expected to boost consumer spending and encourage a faster transition to electric vehicles, aligning with India’s vision for a sustainable future.

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