GST Council slashes rates on buses, trucks, and ambulances to 18%

The Goods and Services Tax (GST) Council on Wednesday approved a reduction in the tax rate on buses, trucks, and ambulances to 18% from 28%, a move aimed at easing costs for the automotive industry and stimulating demand in key commercial vehicle segments amid sluggish economic growth.

The decision, announced during the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman, comes as the automotive sector grapples with rising input costs and a slowdown in sales, particularly in heavy commercial vehicles and small commercial vehicles. Industry executives said the tax cut could lower vehicle prices by up to 10%, potentially reviving investments and fleet expansions in transportation and logistics. Trucks represent over 60% of the commercial vehicle market, with demand tied closely to manufacturing and e-commerce growth.

For the bus segment, which has been hit hard by post-pandemic shifts in public mobility and tourism, but later jumped significantly in later years, the lower GST is expected to make new purchases more attractive for state transport corporations and private operators.

Ambulances, often classified under commercial vehicles for tax purposes, stand to benefit significantly in the healthcare sector, where affordability remains a barrier to expanding emergency services. The segment, though smaller, has seen increased demand due to investments in rural health infrastructure.