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
- Boost for Drivers & Small Businesses
Lower upfront costs mean drivers and fleet operators can purchase new vehicles more easily. - Better Loan Affordability
Since loans are calculated on the on-road price, the EMI burden reduces significantly. - Push for Electric Rickshaws
With lower GST and government incentives, e-rickshaws become even more attractive, supporting India’s clean mobility mission. - 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
| Factor | Impact |
|---|---|
| Demand | Expected surge in urban & semi-urban markets |
| Fleet Modernization | Drivers likely to upgrade from old diesel/petrol rickshaws |
| Electric Mobility | Faster adoption due to reduced prices + subsidies |
| Employment | More 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.