GST rate cut on small cars and TVs — pricing impact for consumers 2026

GST Rate Cut on Small Cars and TVs — Pricing Impact for Consumers in 2026

The GST rate rationalisation introduced in 2025 has continued to influence consumer prices and buying decisions in 2026. Among the most visible changes are the reduction in GST on small cars and the move to a uniform 18% GST rate on televisions.

For consumers, the headline is simple: products that previously carried a 28% GST rate in the affected categories now attract 18% GST. But the actual reduction in the price paid by a customer depends on the product’s pre-tax price, the manufacturer’s pricing strategy, discounts and other costs.

The changes were implemented from 22 September 2025.

What Changed Under the GST Rationalisation?

The GST Council’s 2025 rate changes brought significant relief to selected consumer products.

For small cars, GST was reduced from 28% to 18%.

For televisions, the earlier distinction based on screen size was removed. TVs that previously attracted 28% GST now come under the uniform 18% GST rate.

GST Rate at a Glance

Product	Earlier GST	GST from 22 Sept 2025
🚗 Eligible Small Cars	28%	18%
📺 TVs up to 32 inches	18%	18%
📺 TVs above 32 inches	28%	18%

This means the biggest GST benefit for televisions is seen in larger-screen models, while the small-car segment receives a direct rate reduction from 28% to 18%.

GST on Small Cars: What Consumers Need to Know

Not every compact-looking car automatically qualifies as a “small car” for GST purposes.

The GST classification is based on engine capacity and vehicle length.

Petrol, LPG & CNG Cars

To fall within the small-car category, the vehicle must have:

Engine capacity of up to 1200 cc

Length of up to 4000 mm

Diesel Cars

The applicable limits are:

Engine capacity of up to 1500 cc

Length of up to 4000 mm

The GST rate for qualifying small cars was reduced from 28% to 18%.

• Important: A car being marketed as “compact” or “entry-level” does not by itself determine its GST classification. The prescribed engine-capacity and length criteria need to be considered.

How Much Can a Car Buyer Save?

The impact can be understood with a simple example.

Suppose the pre-GST price of an eligible small car is ₹8 lakh.

Earlier GST at 28%

GST = ₹8,00,000 × 28% = ₹2,24,000

Total = ₹10,24,000

GST at 18%

GST = ₹8,00,000 × 18% = ₹1,44,000

Total = ₹9,44,000

Potential difference

₹80,000

So, purely from the change in GST rate, the tax component in this example falls by ₹80,000.

• But remember: This does not necessarily mean every customer will see exactly ₹80,000 deducted from the manufacturer’s final quoted price. The final ex-showroom price can also be affected by manufacturer pricing, dealer discounts, insurance, registration charges, accessories and other components.

What Happened to GST on Televisions?

The television industry saw another important change.

Previously:

TVs up to 32 inches → 18% GST

Larger TVs → 28% GST

Under the revised structure, all TVs and monitors are uniformly taxed at 18% GST.

This is particularly relevant for consumers purchasing large-screen LED, LCD and similar televisions, because these products previously carried the higher 28% GST rate.

Example: Impact on a Large-Screen TV

Suppose a television has a pre-GST price of ₹60,000.

Earlier GST at 28%

GST = ₹60,000 × 28% = ₹16,800

Total = ₹76,800

New GST at 18%

GST = ₹60,000 × 18% = ₹10,800

Total = ₹70,800

Potential tax saving

₹6,000

The consumer therefore has a potential ₹6,000 reduction in the tax component, assuming the pre-tax price remains unchanged.

Will Consumers Actually See the Full GST Benefit?

This is one of the most important questions.

A reduction in GST does not automatically guarantee that the entire tax saving will appear as an equal reduction in the final retail price.

The final price can be influenced by:

Manufacturer pricing

Dealer margins

Promotional discounts

Input costs

Transportation

Insurance

Accessories

Market demand

Exchange offers

Financing schemes

Therefore, consumers should compare the final invoice price, rather than simply looking at the advertised discount.

Consumer Tip

When buying a car or television, compare the pre-tax/ex-showroom price and the final invoice amount before and after the GST change. A large promotional discount is not necessarily the same thing as a GST benefit.

GST Reduction vs Discount — What’s the Difference?

These two are often confused.

GST Reduction

This is a change in the tax applicable to the product.

Manufacturer Discount

This is a commercial pricing decision made by the manufacturer or dealer.

For example, if a dealer says:

“₹50,000 discount due to GST benefit”

the consumer should still check the invoice to understand how the final price has actually been calculated.

The GST rate applicable to eligible products is a statutory matter, whereas discounts are commercial decisions.

Impact on the Small-Car Market

The small-car segment is particularly important for first-time buyers and middle-income households.

The government has stated that the reduction in GST is intended to make affordable cars cheaper and encourage demand, particularly in smaller cities and towns.

The impact can extend beyond the buyer.

Higher vehicle demand can support:

Car Manufacturers → Component Suppliers → Dealers → Service Centres → Auto Finance → Employment

This creates a wider economic effect across the automotive ecosystem.

Recent market data also indicates that passenger-vehicle demand remained strong in 2026; July 2026 passenger-vehicle sales reportedly reached a record monthly level, with GST reductions cited among the factors supporting affordability and demand.

Impact on the Television Market

For televisions, the change is particularly significant for larger-screen models.

A television that previously attracted 28% GST now falls under the 18% rate.

This can make premium and large-screen televisions more accessible to consumers and may encourage households to upgrade from older models.

The government has also linked the reduction with stronger domestic demand and the development of India’s electronics manufacturing ecosystem.

Benefits for Manufacturers and the Economy

The GST reduction isn’t designed only to benefit consumers.

Lower taxation can potentially increase demand, which can encourage manufacturers to increase production.

For the automobile sector, increased demand can benefit:

Auto-component manufacturers

Tyre manufacturers

Battery manufacturers

Dealers

Workshops

Logistics companies

Auto-finance companies

The government has highlighted this potential multiplier effect across the automotive supply chain.

Similarly, lower GST on televisions and other electronics is expected to support domestic electronics manufacturing and demand.

Small Cars vs TVs: Consumer Impact

Factor	🚗 Small Cars	📺 TVs
Earlier GST	28%	18% / 28% based on size
New GST	18%	18% for all TVs
Biggest benefit	Eligible small cars	Larger TVs
Main consumer benefit	Lower tax component	Lower tax on previously 28% TVs
Likely impact	Better affordability & mobility	More affordable large-screen upgrades
Effective from	22 Sept 2025	22 Sept 2025

What Consumers Should Check Before Buying

The GST reduction doesn’t mean that buyers should automatically purchase a product simply because it is advertised as “GST reduced.”

Before making a purchase, check:

For Cars

• Engine capacity
• Vehicle length
• Ex-showroom price
• Dealer discount
• Insurance cost
• Registration charges
• Accessories
• Finance/EMI cost

For TVs

• Screen size
• Model and specifications
• Pre-GST/base price
• GST charged on invoice
• Dealer discount
• Extended warranty
• Installation and accessory charges

A Simple Rule for Consumers

Don’t ask only:

“How much discount am I getting?”

Instead ask:

“What is the final amount I have to pay?”

This is especially important because GST reductions, manufacturer discounts and dealer promotions can all affect the final price differently.

Key Takeaways

The GST rationalisation has created a meaningful change for consumers purchasing eligible small cars and televisions in 2026.

Small Cars

GST has fallen from 28% to 18% for qualifying petrol, LPG and CNG cars up to 1200 cc and diesel cars up to 1500 cc, subject to the 4000 mm length limit.

Televisions

All TVs are now under a uniform 18% GST rate, meaning larger televisions that previously attracted 28% GST receive the most direct tax-rate benefit.

For Consumers

The tax reduction can lower the final purchase cost, but the actual saving depends on the product’s pre-tax price and the seller’s pricing.

For Businesses

Higher consumer demand can support manufacturing, dealerships, supply chains and employment.

Frequently Asked Questions

Is GST on small cars now 18%?

Yes. Eligible small cars moved from 28% GST to 18% GST from 22 September 2025.

What qualifies as a small car?

For petrol, LPG and CNG cars, the engine capacity must be up to 1200 cc and length up to 4000 mm. For diesel cars, the engine-capacity limit is 1500 cc, with the same 4000 mm length limit.

What is the GST rate on TVs in 2026?

All TVs are uniformly taxed at 18% GST under the revised structure.

Are large-screen TVs cheaper because of GST?

They can be, because large TVs that previously attracted 28% GST now attract 18%. However, the final retail price also depends on the manufacturer’s and dealer’s pricing.

Does a 10% GST reduction mean the product price falls by 10%?

No. The GST rate is reduced by 10 percentage points, from 28% to 18%. The actual reduction in the final price depends on the pre-tax value.

Conclusion

The GST rate cuts on eligible small cars and televisions have created a direct tax benefit for consumers and have made these products more affordable compared with the earlier tax structure.

For small cars, the reduction from 28% to 18% can make a noticeable difference in the ex-showroom price, particularly for first-time buyers. For televisions, the move to a uniform 18% GST rate provides the clearest benefit to larger-screen models that previously attracted 28% GST.

For consumers in 2026, however, the smartest approach is to look beyond the headline GST reduction. Comparing the base price, GST, dealer discount, insurance, registration and final invoice value will give a much clearer picture of the actual saving.

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