KATHMANDU: The Indian government has announced a major cut in Goods and Services Tax (GST) on vehicles and farm equipment to boost demand.
GST on small cars, motorcycles up to 350cc, three-wheelers, buses, trucks and ambulances has been reduced to 18 % from 28 %. The new rates will take effect from September 22.
Hybrid cars will also benefit from the change. Petrol hybrids below 1,200cc and diesel hybrids below 1,500cc will now be taxed at 18 % instead of 28 %. Auto parts, previously taxed at different rates, will now carry a uniform 18 % GST.
The agriculture sector will also see relief. Tractors and other farming machines such as harvesters, threshers, balers and sowing equipment will now attract only 5 % GST, down from 12 %. Similarly, 12 types of bio-pesticides will now be taxed at 5 % instead of 12 %.
However, GST on motorcycles above 350cc has been raised from 28 % to 40 %, a move that will affect brands such as Royal Enfield, KTM, Triumph and Harley-Davidson.
Impact on Nepal’s auto market
The GST cut in India is expected to influence Nepal’s automobile market, which depends heavily on Indian imports.
Though GST does not apply directly to exports, lower rates in India could reduce production costs and ex-factory prices. This may lead to cheaper imports of motorcycles, small cars and spare parts in Nepal.
For Nepali consumers, the benefit will depend on customs duty, VAT and dealer pricing. Still, lower auto part costs could reduce vehicle maintenance expenses and affordable farm equipment may support Nepal’s agriculture sector. Overall, the decision is seen as positive for Nepali importers and could make vehicles slightly more affordable for buyers.
