GST Revision For Auto Components Will Also Help Vehicle Owners

It’s not only the new automobile buyers who have reasons to cheer. Existing owners also have something positive in the GST reforms announced on Wednesday. The revised GST on auto components will also have a positive impact on vehicle ownership, as many components will become cheaper now. So far, auto components came under two tax slabs – 18% and 28%.

Under the GST 2.0 announcement of 3rd September, they will now be taxed at 18% only. 40% of all components attracted the higher tax rate so far as they were considered luxury or performance related.

“The reduction in GST from 28% to 18% on auto components is a welcome step that will provide much-needed relief to both the auto industry and consumers, and have a great impact on Total Cost of Ownership (TCO),” says Udit Sheth, Vice-Chairman, Setco Automotive.

The step as part of the GST reforms will also help the automotive aftermarket tackle the challenge of spurious or sub-standard parts. Shradha Suri Marwah, President, Automotive Components Manufacturers Association (ACMA),“This decisive step will curb the grey market, encourage the use of quality compliant components, ease compliance, and support MSMEs - thereby strengthening the global competitiveness and resilience of India’s USD 80.2 billion auto component industry,” 

Having a uniform 18% tax for components was a long-standing recommendation of ACMA. The Indian automotive aftermarket, pegged at ₹99,000 crore, has been growing at a CAGR of 7.4% over the last five years. Premiumisation, organised service workshops, and direct to consumer sales model are also driving the industry’s growth. 

“The decision to reduce GST on auto components from 28% to 18% is a particularly welcome step, as it will ease cost pressures on the automotive supply chain, enhance efficiencies, and provide much-needed relief to manufacturers and OEMs,” says Dr. Sudhir Mehta, Founder and Chairman, Eka Mobility. He also adds that the GST revision “will particularly support critical segments such as ambulances and specialised vehicles, ensuring greater accessibility and affordability of essential transport solutions.”

So the next time you take your vehicle for service, you can also expect a lower bill for components, if they have moved from the 28% tax slab, to 18%.