GST 2.0 Update: Auto-Rickshaw Prices Drop as Tax Cut Brings Relief for Buyers

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by

Himanshu
in

The rollout of GST 2.0 from 22 September 2025 has introduced sweeping changes across industries. One of the biggest beneficiaries is the three-wheeler segment, especially auto-rickshaws and e-rickshaws, which serve as the backbone of India’s last-mile connectivity.

With the tax rate slashed from 28% to 18%, the cost of owning and operating an auto-rickshaw is now significantly lower, giving a boost to drivers, fleet owners, and small businesses.

🔹 GST 2.0: What Changed for Auto-Rickshaws?

Earlier, auto-rickshaws were taxed at 28% GST, making them expensive for drivers and operators. Under GST 2.0, the rate has been brought down to 18%, aligning them with essential mobility services rather than luxury vehicles.

This move is expected to:

  • Reduce upfront purchase costs
  • Improve financing and EMI affordability
  • Encourage replacement of old, polluting vehicles
  • Boost demand for both conventional and electric rickshaws

🔹 Price Impact of GST Reduction

The 10% cut in GST translates into direct savings for buyers. Here’s an illustrative breakdown:

Auto-Rickshaw Price (Ex-Showroom)Before GST 2.0 (28%)After GST 2.0 (18%)Buyer Savings
₹2,50,000₹3,20,000₹2,95,000₹25,000
₹3,00,000₹3,84,000₹3,54,000₹30,000
₹3,50,000₹4,48,000₹4,13,000₹35,000

*Figures rounded for clarity; include base price + GST only.

👉 Depending on the model, buyers can save between ₹20,000 and ₹35,000 instantly.

🔹 Why This Matters

  1. Boost for Drivers & Small Businesses
    Lower upfront costs mean drivers and fleet operators can purchase new vehicles more easily.
  2. Better Loan Affordability
    Since loans are calculated on the on-road price, the EMI burden reduces significantly.
  3. Push for Electric Rickshaws
    With lower GST and government incentives, e-rickshaws become even more attractive, supporting India’s clean mobility mission.
  4. Industry Growth
    Lower vehicle prices are expected to increase sales, benefiting manufacturers, dealers, and the informal transport economy.

🔹 Auto-Rickshaw Industry Outlook After GST 2.0

FactorImpact
DemandExpected surge in urban & semi-urban markets
Fleet ModernizationDrivers likely to upgrade from old diesel/petrol rickshaws
Electric MobilityFaster adoption due to reduced prices + subsidies
EmploymentMore drivers entering the market with affordable vehicles

✅ Conclusion

The GST 2.0 tax cut on three-wheelers is a landmark decision for India’s mobility sector. By reducing GST from 28% to 18%, the government has made auto-rickshaws more affordable, directly benefiting drivers and small entrepreneurs.

With potential savings of up to ₹35,000 per vehicle, this move is expected to increase demand, accelerate the shift towards cleaner vehicles, and improve last-mile connectivity across India.