The rationalisation of Goods and Services Tax (GST) rates has led to a significant rise in vehicle registrations and is expected to further boost demand across automobile segments, the government informed Parliament.
This information was provided by the Minister of Road Transport and Highways, Nitin Gadkari, in a written reply to Lok Sabha on the impact of GST rationalisation on the automobile sector.
Vehicle Registrations Rise Sharply
The minister said the revised GST rates came into effect from September 2025. According to data available on the Vahan portal, the total number of vehicle registrations recorded a 29.1 percent year-on-year increase in October 2025 compared to the same month last year.
Citing inputs from the Society of Indian Automobile Manufacturers (SIAM), the minister noted that vehicle demand is expected to rise based on the sales trend of the last three months.
The reduction in GST has lowered the overall on-road prices of vehicles, along with financing costs and road taxes, making purchases more attractive.
Commercial Vehicles See Major Gains
The commercial vehicle segment has benefited from the reduction in GST rates from 28 percent to 18 percent. Apart from generating incremental sales of new buses and trucks, the tax rationalisation is expected to stimulate replacement-led demand, accelerating fleet renewal across the sector.
Fleet Modernisation Gets Policy Support
The government has already put in place a policy framework under the Voluntary Vehicle Modernisation Programme (VVMP) to encourage replacement of old vehicles.
The programme offers incentives such as state road tax concessions, waiver of registration fees and manufacturer-led benefits for scrapping old vehicles and purchasing new ones.
Lower GST rates further strengthen the economic viability of fleet modernisation for transport operators, the minister said.
