Whether you're buying your first car or upgrading to an electric vehicle, understanding the taxes that apply is crucial. Here's a detailed breakdown of Goods & Services Tax (GST) and compensation cess applicable to different types of vehicles in India, as per the Society of Indian Automobile Manufacturers (SIAM) as of May 3, 2023.
GST & Cess Rates by Vehicle Category
| Vehicle Category | GST | Compensation Cess | Total Tax Payable |
|---|---|---|---|
| Electric Vehicles (EVs) | 5% | 0% | 5% |
| Hydrogen Fuel Cell Vehicles | 12% | 0% | 12% |
| Three-Wheelers | 28% | 0% | 28% |
| Two-Wheelers ≤ 350cc | 28% | 0% | 28% |
| Two-Wheelers > 350cc | 28% | 3% | 31% |
| Petrol/CNG/LPG Cars ≤ 4m & ≤ 1200cc | 28% | 1% | 29% |
| Diesel Cars ≤ 4m & ≤ 1500cc | 28% | 3% | 31% |
| Cars ≤ 1500cc (Petrol/Diesel) | 28% | 17% | 45% |
| Cars > 1500cc | 28% | 20% | 48% |
| SUVs > 4m, >1500cc, >170mm GC | 28% | 22% | 50% |
| Hybrid Vehicles ≤ 4m (Petrol ≤ 1200cc / Diesel ≤ 1500cc) | 28% | 0% | 28% |
| Hybrid Vehicles > 4m or >1200cc (Petrol) / >1500cc (Diesel) | 28% | 15% | 43% |
| Public Transport (10–13 seater) | 28% | 15% | 43% |
| Public Transport >13-seater / Commercial Goods Vehicles | 28% | 0% | 28% |
Key Insights for Buyers
- EVs enjoy the lowest tax slab at just 5% — ideal for cost-conscious and eco-friendly buyers.
- SUVs and high-displacement cars attract the highest tax slab — up to 50%.
- Hybrids have mixed rates depending on engine size and length.
- Two-wheelers above 350cc carry an additional cess of 3%, totaling 31%.
Source: Society of Indian Automobile Manufacturers (SIAM), May 2023
Final Thoughts
Understanding vehicle tax structures helps you make informed decisions — especially as EVs and hybrids become more mainstream in India. Bookmark this guide and refer to it before making your next vehicle purchase!
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