Luxury carmakers push for quick GST clarity as festive season approaches

The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, is scheduled to meet on September 3-4 to discuss moving to a two-slab taxation system.

Luxury carmakers in India have called for swift clarity on new GST rates, saying it is crucial for sustaining momentum in the auto sector during the upcoming festive season.

The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, is scheduled to meet on September 3-4 to discuss moving to a two-slab taxation system.

Industry leaders say the ongoing uncertainty is making prospective buyers adopt a wait-and-watch approach, affecting sales.

Hardeep Singh Brar, President and CEO of BMW Group India, told PTI, “Consumer interest and demand is strong, but uncertainty around GST rates has delayed purchase decisions. Expediting clarity is essential to ensure the auto sector contributes robustly to economic growth this quarter.” Brar also emphasised the need to retain the existing 5% GST on passenger electric vehicles, saying, “An adverse impact from GST rates can derail the vision of high EV adoption and local production in India.”

Audi India Head Balbir Singh Dhillon said the luxury carmaker is entering the festive season with a positive outlook. “Post the GST clarification expected in early September, we expect consumer confidence to grow and demand to increase across our product range, particularly for SUVs,” he said.

Mercedes-Benz India MD & CEO Santosh Iyer highlighted the company’s upcoming integrated campaign, adding, “We expect this festive season to bring impetus and drive sales, thanks to positive customer sentiment and a refreshed portfolio.”

However, analysts caution that growth in the luxury segment may remain muted. Jitin Makkar, Senior Vice President at Icra, said, “Festive season sales are expected to grow only in mid-single digits. High US tariffs and geopolitical tensions continue to dampen business sentiment. While a potential GST cut on smaller cars may boost demand in the mass market, the luxury segment is likely to face a subdued environment.”

Luxury cars have outpaced broader passenger vehicle growth between FY22 and FY25, driven by aspirational demand among younger and first-time buyers. Still, subdued sales in the first half of CY2025 due to market volatility indicate that overall annual growth could remain modest despite festive season boosts.

(With inputs from PTI)