The 56th GST Council meeting has rationalized GST rates for the transportation sector, effective from 22nd September 2025. The changes simplify the tax structure by moving several essential vehicles and parts from the 28% slab to 18%, while shifting luxury and high-end transport modes into the 40% slab. Below is the detailed classification as per the press release.
(28% to 18%)
| S. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods |
|---|---|---|
| 1 | 4011 | New pneumatic tyres, of rubber [other than of a kind used on/in bicycles, cycle-rickshaws and three wheeled powered cycle rickshaws; rear tractor tyres; and of a kind used on aircraft] |
| 2 | 8701 | Road tractors for semi-trailers of engine capacity more than 1800 cc |
| 3 | 8702 | Motor vehicles for the transport of ten or more persons, including the driver [other than buses for use in public transport, which exclusively run on Bio-fuels] |
| 4 | 8703 | Petrol, Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm. |
| 5 | 8703 | Diesel driven motor vehicles of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm. |
| 6 | 8702 or 8703 | Motor vehicles cleared as ambulances duly fitted with all the fitments, furniture and accessories necessary for an ambulance from the factory manufacturing such motor vehicles |
| 7 | 8703 | Three wheeled vehicles |
| 8 | 8703 40, 8703 60 | Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm |
| 9 | 8703 50, 8703 70 | Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm |
| 10 | 8704 | Motor vehicles for the transport of goods [other than Refrigerated motor vehicles] |
| 11 | 8706 | Chassis fitted with engines, for the motor vehicles of headings 8701 to 8705 |
| 12 | 8707 | Bodies (including cabs), for the motor vehicles of headings 8701 to 8705 |
| 13 | 8708 | Parts and accessories of the motor vehicles of headings 8701 to 8705 [other than specified parts of tractors] |
| 14 | 8711 | Motorcycles of engine capacity (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars, of an engine capacity not exceeding 350cc; side cars |
| 15 | 8714 | Parts and accessories of vehicles of heading 8711 |
| 16 | 8903 | Rowing boats and canoes |
| 17 | 9401 20 00 | Seats of a kind used for motor vehicles |
(28% to 40%)
| S. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods |
|---|---|---|
| 1 | 8703 | Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars, other than those mentioned at Sr. Nos.4,5,6,7,8 and 9 of above table [wherein 28% to 18% is mentioned ] |
| 2 | 870340, 870360 | Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm |
| 3 | 870350, 870370 | Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm |
| 4 | 8711 | Motor cycles of engine capacity exceeding 350 cc |
| 5 | 8802 | Aircraft for personal use. |
| 6 | 8903 | Yacht and other vessels for pleasure or sports |
FAQ
FAQs on GST Rates for Vehicles and Transportation Sector
26. What is the revised GST rate on small petrol, LPG, CNG, or diesel cars? What is covered under small cars?
The GST rate on all small cars has been reduced from 28% to 18%. For the purposes of GST, small cars means Petrol, LPG, or CNG cars with engine capacity up to 1200 cc and length up to 4000 mm and Diesel cars with engine capacity up to 1500 cc and length up to 4000 mm.
27. What is the new GST rate on vehicles exceeding 1500 cc or length exceeding 4000mm? What is the GST rate on utility vehicles?
The GST rate on all mid-size and large cars i.e vehicles exceeding 1500 cc or length exceeding 4000mm is 40%. Further, motor vehicles in the category of Utility Vehicles, by whatever name called including Sports Utility Vehicles (SUV), Multi Utility Vehicles (MUV), Multi-purpose Vehicles (MPV) or Cross-Over Utility Vehicles (XUV), with an engine capacity exceeding 1500 cc, length exceeding 4000 mm, and ground clearance of 170 mm and above, will also attract a GST rate of 40% without any cess.
28. What is the GST rate on 3-wheelers?
The GST rate on three-wheelers classified under HSN 8703 is 18%. It has been reduced from 28%.
29. What is the GST rate on buses and other vehicles meant to carry 10 or more persons, including the driver, such as buses?
All motor vehicles designed to transport ten or more persons, including the driver, and classified under HSN 8702, will attract a GST rate of 18%. It has been reduced from 28%.
30. What is the GST rate on vehicles supplied as ambulances?
Motor vehicles cleared as ambulances, and duly fitted with all necessary fitments, furniture, and accessories necessary for an ambulance at the time of clearance from the factory will attract a GST rate of 18%. It has been reduced from 28%.
31. What is the GST rate on goods transport vehicles such as lorries and trucks?
Motor vehicles designed for the transport of goods, such as lorries and trucks, classified under HSN 8704 will attract a GST rate of 18%. It has been reduced from 28%.
32. What is the GST rate on trailers and semi-trailers of tractors?
Tractors, other than road tractors for semi-trailers of engine capacity more than 1800 cc, attract a GST rate of 5%. However, road tractors for semi-trailers, with engine capacity more than 1800 cc attract a GST rate of 18%. It has been reduced from 28%.
33. What is the GST rate on motorcycles?
Motorcycles of engine capacity upto 350 cc attract a GST rate of 18% while Motorcycles of engine capacity exceeding 350 cc attract a GST rate of 40%.
34. GST rate is 18% for motor cycles upto 350cc? Does this include 350cc motor cycles?
The 40% rate is applicable only to motorcycles exceeding 350cc. Therefore the 18% rate also applies to motor cycles of 350cc or lesser than 350cc.
35. Currently mid-size and big cars attract 28% GST and compensation cess ranging from 17-22% with the overall tax incidence ranging from 45-50%. What will be the new rate?
The new GST rate on mid-size and big cars will be 40% with no compensation cess.
36. Has GST rate been reduced on bicycles and parts?
The GST rate has been reduced to 5% on bicycles and its parts from 12%.
37. Why has small agricultural tractors not been fully exempted from GST?
The objective is to provide relief to the farmers while not disincentivising domestic producers. Fully exempting small tractors would be counterproductive. When the rate of tax on any goods is nil, the suppliers cannot claim Input Tax Credit (ITC) on the inputs used in manufacture of the goods and will have to reverse the same. This means that the producers have to absorb this cost which will eventually be passed to the buyers.
38. Why is 40% rate referred to as a ‘special rate’? What is the basis for subjecting goods to special rate?
The special rate is applicable only on few select goods, predominantly on sin goods and few luxury goods and therefore is a special rate. Most of these goods attracted Compensation Cess in addition to GST. Since it has been decided to end the Compensation Cess levy, the Compensation Cess rate is being merged with GST so as to maintain tax incidence on most goods. On other goods and services, the special rate has been applied as these were already attracting the highest GST rate of 28%.
39: Whether the passenger transportation services will be taxed at 18%?
No, the passenger transportation services will be taxed at a merit rate of 5% with no ITC. However, service providers will have the option to charge a standard rate of 18%, which would allow them to claim full ITC.
40. Whether the same option of two rates is available to transport of passenger by air?
No such option is available for transport of passenger by air i.e. if travel is by economy class then rate of GST is 5% otherwise the GST rate will be 18%.
60. Whether the rate of 18% is applicable to transportation of goods by GTA?
The transportation of goods by GTA will continue to be taxed at the merit rate of 5% with no ITC. However, the GTA will have the option of charging GST at the standard rate of 18% with full ITC.
61. Whether transportation of goods in containers by Container Train Operator (CTO) will be taxed at 12%?
No, service of transportation of goods in container by CTO will be given the option of charging 5% rate with no ITC or 18% rate with full ITC.
62. What is the GST rate for transportation of goods by the multi modal transporter?
Multimodal transportation of goods will be taxed at 5% GST with restricted ITC provided no transportation of goods by air is involved. However, where the transportation of goods by air is involved then the rate of GST will be 18% with full ITC.
63. Why not fully exempt GTA services from GST considering the importance of this sector?
When a service is exempt the service provider cannot claim ITC. This adds to their cost and makes the service costlier. Moreover, specific exemptions have already been provided where required such as transport of essential items (B2C) like agricultural produce, milk, etc.
The rationalisation of GST rates in the transportation sector highlights a clear distinction between essential and luxury use. Essential vehicles such as ambulances, buses, small cars, three-wheelers, and goods transport vehicles now fall in the 18% bracket, providing relief to consumers and businesses. On the other hand, luxury cars, SUVs, big motorcycles, yachts, and personal aircrafts have been placed in the higher 40% slab, ensuring that luxury consumption continues to bear a higher tax burden.
This move balances affordability for the masses with revenue protection, while simplifying the structure by eliminating cess and bringing transparency to the taxation of vehicles.
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