If you're planning to buy a new SUV, the first question that comes to mind is: "How much GST will be charged on this SUV?"
Previously, understanding GST on cars was quite confusing-base GST was separate, compensation cess was separate, and everything depended on engine size, car length, and fuel type.
But now, after the 56th GST Council Meeting in September 2025, all this confusion has ended. Now there are only two slabs-18% or 40% GST, and the compensation cess has been removed.
Key Highlights - GST on SUVs in India (2025)
- Only 18% GST on small cars and compact SUVs
- Flat 40% GST on larger SUVs or luxury models
- Still only 5% GST on electric SUVs
- Compensation Cess now completely eliminated
- Pricing has now become more clear, simple, and affordable
What is an SUV?
SUV stands for Sport Utility Vehicle-a car that combines the comfort of a car with the features of an off-road vehicle, such as:
- High ground clearance
- 4-wheel drive
- Spacious seating (5 or 7-seater)
India has several categories, from compact SUVs to full-size SUVs-and each has a different GST slab.
Types of SUVs and GST Rates Above (2025)
1. Compact SUVs - 18% GST
If an SUV has a petrol engine ≤ 1200cc, a diesel engine ≤ 1500cc, and a length ≤ 4000mm, it will only be subject to 18% GST.
Examples:
- Tata Nexon
- Hyundai Venue
- Kia Sonet
The pricing of these models has now become even more competitive.
2. Large / Mid-Size SUVs - 40% GST
If the SUV is above this limit (whether the engine is larger or the car is longer), it will be subject to 40% GST.
Examples:
- Hyundai Creta
- Mahindra XUV700
- Tata Harrier
- Toyota Fortuner
These models previously faced a tax of up to 50% (28% GST + cess), but now it's a flat 40%.
3. Hybrid SUVs - 18% or 40% GST
The same rules apply to hybrid SUVs:
- If it's a compact hybrid - 18% GST
- If it's a large hybrid SUV - 40% GST
4. Electric SUVs - 5% GST
Whether the SUV is small or large, if it's fully electric, it will only be subject to a 5% GST.
This is a government incentive to promote eco-friendly vehicles.
GST Rate Chart for SUV Cars in India (2025)SUV Type Engine/Length Criteria GST RateCompact SUVs Petrol ≤ 1200cc, Diesel ≤ 1500cc, Length ≤ 4000mm 18%Large/Mid-Size SUVs Above limits 40%Electric SUVs Any size/engine, but fully electric 5%
Note: Car specifications are defined according to the rules of the Motor Vehicles Act, 1988.
Compensation Cess has been removed - What's the difference?
Previously, the base GST on SUVs was 28%, but a compensation cess was also applicable, which could range from 1% to 22%.
Meaning:
- Compact SUVs have a total GST rate of ~29-30%
- Luxury SUVs have a total GST rate of ~50%
Now:
There are only two slabs - 18% and 40%
Cess has been completely abolished, which has increased price transparency.
Why This Change Is a Big Deal?
- Pricing is now clear for car buyers.
- Filing and compliance have become easier for manufacturers.
- Green vehicles like EV SUVs and compact models have received incentives.
- A fixed tax system has also been introduced in the luxury segment.
FAQs: GST Questions on SUV Cars
Q1. How much GST is charged on SUV cars?
Depending on the size and engine of your SUV, GST will be 18% or 40%. Fully electric SUVs only 5%.
Q2. How much GST is charged on the Kia Sonet and Hyundai Venue?
Both fall into the compact SUV category, so they will be charged 18% GST.
Q3. How much tax is charged on electric SUVs?
Pure electric SUVs are charged 5% GST-size or engine does not matter.
Q4. Does the compensation cess still apply?
No, the compensation cess has now been completely abolished for SUVs and passenger cars.
Conclusion: GST on SUVs is now simple and fair
After the 2025 reforms, GST on SUVs in India has become a clear and transparent system. Rates have been reduced for compact cars and electric SUVs, while a fixed slab has been introduced for larger luxury SUVs.
If you are planning to buy a car, now the tax calculation is simple - and you can make the decision confidently.
CAclubindia
