GST Council to Meet on September 3-4 to Review Tax Cut on Small Cars and 2W

The government has officially announced the dates for the 56th meeting of the Goods and Services Tax (GST) Council. According to an office memorandum issued by Revenue Secretary Arvind Srivastava on Friday, the meeting will be held on September 3 and 4.

Prime Minister Narendra Modi, in his Independence Day speech, had indicated a review of the GST framework and hinted that consumers may get relief by Diwali. Since then, speculation has been rife about a possible reduction in GST rates on small cars and two-wheelers from the current 28% to 18%.

The uncertainty has left many consumers delaying their purchase decisions. With the meeting dates finalized, automakers, dealers, and customers are now expecting clarity and possible tax relief soon. Earlier, the meeting was anticipated to be held around mid-September or October.

Currently, GST rates fall under four slabs—5%, 12%, 18%, and 28%. Passenger vehicles attract 28% GST along with a compensation cess ranging from 1% to 22%. This means small petrol cars face an overall tax of around 29%, while large SUVs can be taxed up to nearly 50%.

As per media reports, the government is also considering restructuring the vehicle taxation framework by creating new categories based on engine capacity. Cars with engines below 1200cc may fall under the reduced 18% GST bracket, while vehicles with larger engines could continue attracting higher taxes.

It is worth noting that the compensation cess on motor vehicles, considered “luxury and sin” items, will remain in place until March 2026. Originally set to end in June 2022, the cess was extended to offset revenue losses faced by states.