Three-wheelers to trucks: GST reform promises new demand in commercial sector

Trucks and lorries, buses carrying ten or more passengers, ambulances and three-wheelers have all been brought under the 18 per cent bracket, a sharp reduction from the earlier 28 per cent. Tractors, the heartbeat of rural India, now attract just 5 per cent GST unless they are road tractors for semi-trailers above 1800 cc, which fall under the 18 per cent slab. The simplification removes a longstanding layer of confusion and, more importantly, lowers acquisition costs in sectors where margins are already wafer-thin. Trucks and buses: A demand nudge where it mattersFor India’s truck makers, this reduction is more than a headline. By stripping away the 28 per cent levy, the government has given a clear signal that it wants to stimulate fleet replacement and encourage first-time buyers. As Ashok Leyland CFO, K.M. Balaji pointed out, moving commercial vehicles to 18 per cent will help unlock demand among small operators who are most sensitive to upfront costs. Also Read : GST 2.0: Here’s what you’ll now pay for SUVs over 4 metres… Larger fleet owners, who are able to offset GST through input credits, may not feel the direct benefit in their balance sheets, but the sentiment boost cannot be discounted. In the bus segment, the 18 per cent rate dovetails with state transport undertakings and private operators who have been gradually reviving orders post-pandemic. Industry players such as VECV have spoken about the steady momentum in bus sales, and a rationalised GST structure could well make procurement decisions easier for both public and private buyers. Three-wheelers: Formalisation meets affordabilityThe three-wheeler business, often dismissed as the poor cousin of the automotive industry, finally has something to cheer about. By bringing down GST from 28 to 18 per cent, the Council has given small entrepreneurs a reason to breathe easier. For the countless men and women who rely on these modest vehicles to ferry goods and passengers through India’s congested towns and villages, this is not just a tax cut. It is a small but significant acknowledgement of their place in the mobility chain. Lower acquisition costs mean that an autorickshaw driver or a delivery operator is less likely to postpone the decision to buy a new vehicle. Coupled with the steady rise of electric three-wheelers, this could well accelerate the move towards organised finance and fleet ownership, areas where informality has reigned for decades. More importantly, the clarity on rates comes just before the festive season, when demand for mobility typically peaks. For those who have long operated on wafer-thin margins, the timing could not have been better. Tractors: A decisive 5 per cent that changes the moodThe sharpest cut has come in the tractor space where GST has been reduced to 5 per cent. For a sector that is directly linked to rural consumption and agrarian sentiment, the decision is both political and economic. Mahindra Group MD & CEO Anish Shah was quick to underline that this rationalisation would strengthen agriculture and automobiles alike, while Rajesh Jejurikar, who oversees Mahindra’s farm and auto divisions, described it as demand supportive for rural markets. The cut in GST rates will not only lower the on-road price of tractors but also lower the cost of spares and parts, bringing comprehensive relief to farmers. As the kharif harvesting season is now around the corner, the step is likely to put an extra layer of optimism in rural demand and give mechanisation one more push. Also Read : Planning to buy a car or bike this Diwali? Here’s how much GST you have to pay What the big names are sayingIndustry voices have been broadly aligned in their support. Mahindra has been vocal in portraying the tax reductions as a correction of inverted duty structures and a long-awaited relief to industries that touch the lives of millions every day. Ashok Leyland has highlighted that simplification will facilitate purchase decisions for SMEs and smaller transporters who tend to postpone replacements due to hefty front-end expenses. Tata Motors, though yet to make a formal statement, is expected to benefit significantly in its core commercial vehicle business where price sensitivity remains high. Dealer bodies such as FADA have also welcomed the GST reset, describing it as an “aspiration booster” that can support pre-festive buying cycles. The sense across the ecosystem is one of cautious optimism, with the expectation that manufacturers will pass on the benefits quickly to customers. The fine print: Pricing, ITC and pre-buy riskThough the GST cut is certainly a good thing, the actual impact will be unevenly felt. Larger fleet operators, who are able to fully utilise input tax credits, may not see a direct P&L windfall. Nonetheless, for owner-drivers and small truckers, the reduced tax will make EMI lighter and enhance cash flows. There is also the possibility of a pre-buy surge in light commercial vehicles and intermediate trucks if manufacturers align factory-gate pricing swiftly with the new regime. With September 22 set as the switchover date, policymakers and dealers will be wary of bottlenecks in invoicing and billing during the transition. Yet, the overall message is clear: the government wants to favour the workhorses of the economy over luxury, and in doing so has offered a cleaner, more predictable tax landscape. Bottom line: Fewer slabs, faster wheelsFor the Indian commercial vehicle industry, the new GST regime is more than just arithmetic. It is about simplifying the tax environment, boosting sentiment, and encouraging investment in new assets. Trucks, buses, and three-wheelers now have a friendlier tax structure at 18 per cent, while tractors have been singled out for a decisive cut to 5 per cent. In a sector that powers both commerce and agriculture, the message is unmistakable, fewer slabs, faster wheels, and a stronger push to get India moving again. Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape. First Published Date: 04 Sept 2025, 12:19 pm IST
Source: hindustantimes.com